| With property values plummeting in areas such as | | | | decline for apartment buildings. |
| Florida, more and more investors and turning their | | | | |
| focus from single family housing to multifamily | | | | With Multifamily apartment properties being a |
| apartment buildings. In the past the main reason | | | | preferred property type for most government |
| why investors choose apartment building is because | | | | agencies such as Fannie Mae, makes financing readily |
| they like the idea of having the tenants pay down | | | | available whether buying or refinancing an apartment |
| the mortgage and pay the expenses of the property | | | | building. Despite the recent credit turmoil, lenders are |
| as they enjoy the benefits of real estate | | | | still offering 75 to 80 percent financing at attractive |
| appreciation, and if purchased and financed correctly | | | | rates. As investors check out risk-tolerance levels and |
| the owners can receive a monthly income similar to | | | | other issues involved in owning other commercial |
| what most people make on a regular 9-5 job. | | | | property types, multifamily apartment rental loan |
| Apartment building ownership is no longer suited for | | | | programs will more than likely prove to be more |
| just the handy man type investor, as more | | | | attractive. |
| management companies have become more | | | | Now if you are considering buying an apartment |
| competitive to handle the head aches associated with | | | | building, it is important to note what lenders are |
| tenants for a fee of just 7 – 10 percent. Again | | | | looking for from borrowers. They like borrowers |
| it goes back to buying right, with the property | | | | that have established multifamily experience, |
| financing and apartment ownership can be put on | | | | managing tenants and usually at least a 680 credit |
| auto pilot. | | | | score. |
| | | | | When it comes to the property, they like to see a |
| Multifamily Investing allows for greater cash flow and | | | | debt service ratio of 1.20, which means that the |
| minimizes risk as you have numerous tenants, when | | | | property is able to cover the expenses on its own, |
| compared to investing in single family homes. This | | | | without assistance from the borrower’s personal |
| increase cash flow makes it possible to hire a | | | | income. Also they don’t like properties that |
| management company and to cover other cost | | | | have a lot of deferred maintenance, delinquent rent |
| involved with owning a multifamily apartment building. | | | | payments and occupancy issues, as these are signs |
| | | | | of poor management and as a result poor |
| Even in today’s declining real estate markets | | | | marketability of the property. This will raise |
| such as Florida, multifamily apartment properties have | | | | concerns for the lender as now they will be concern |
| proven to be one of real estates most stable | | | | with how the property will match up to competing |
| investment vehicles. And as foreclosures continue | | | | apartment buildings in the rental market over the long |
| to increase, people most find somewhere to live and | | | | haul. |
| although some may move back in with family, | | | | |
| majority will turn to renting Apartments, which as a | | | | Although there are lenders out there for the |
| result will cause low vacancy rates for apartment | | | | borrowers with lower scores or for a rehab type |
| building, I guess there is a silver lining in this sub prime | | | | situation, you will find yourself in a short term and |
| mortgage meltdown after all. This will lead to a | | | | expensive loan with rates ranging from 12-18% and |
| boom in the demand for rental multifamily apartment | | | | also a loan to value of 50-60%. These types of |
| properties. According to the Mortgage Bankers | | | | private loans are short term are mostly suited for |
| Association, when it comes to commercial properties, | | | | the experienced investor that like to rehab and flip |
| there as been a significant decline in the demand for | | | | properties. |
| loans on most commercial property types and minimal | | | | |