To get financing for a 12 unit complex, what will I need to show the bank? I will be putting down 35%.

I have a 750 credit score, however I am currently on unemployment because my previous company went bankrupt. I plan on returning to work ASAP and I will be making 50-75k per year.
In Buying Property - Asked by Anthony S. - Aug 23, 2010
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Answer(s)

Raymond L.
Broker/Agent
Tulsa, OK

Typically the bank is first going to look to the property and making sure that the amount left over after the expenses is sufficient to cover the debt by at least 1 1/4 times. However 35% is over the typical 20 to 25% down. Additionally they will want to know that you have enough reserves to cover and short falls in the first year. Last they will look at your financial history, your credit as well as experience in apartment / multifamily properties

Aug 24, 2010
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Michael B.
Broker/Agent
Omaha, NE

Anthony- The banks are currently professing to want 30% down. Suggest you keep the other 5% for reserves. They will need two years ACTUAL Income and Expense Reports on the property to examine cash flow. They are seeking 1.25 to 1.6 coverage for the debt coverage, depending on the bank, and other factors, including your unemployment. If you have experience in managing/operating multi-family, or even any kind of rental units, it will be a consideration.

Aug 24, 2010
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Nathanael Q.
Owner/Investor
Madison, CT

The other answers are very helpful, but why are you putting down 35%? Put down the min required and hold your cash for unexpected repairs and upgrades. Also you get a better return on your investment by putting less down than 35%. example...$100,000 property 35% down =$35000...income from property $12000 year=about 29% return a year........same property 25% down=$25,000 income from property $12000=50%return on investment....buy more property with left over dough and send me a thank you card.

Aug 31, 2010
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Anthony S.
Owner/Investor
Cornwall, NY

Thanks for the answers. Nathaniel, I will be doing a 1031 exchange so that is why I will be putting down 35%. Thanks again

Sep 7, 2010
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Nathanael Q.
Owner/Investor
Madison, CT

Anthony,
On the 1031 exchange any additional funds can be used for repairs to the selected property. Timelines will be important. Good luck

Sep 8, 2010
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Monica M.
Owner/Investor
Valencia, CA

Lenders are now looking for an executive summary as well as actual income and expenses on the property substantiated with real bank statements and IRS schedules (as supplied by the seller). They are also interested in seeing a recent rent roll of the property. A management resume is sometimes requested by various lenders but for a 12-unit this is probably something they won't necessarily request, especially if it's a larger bank offering the funding on the deal. Finally, many lenders are requiring that the occupancy rate is 85% or above. This means you will need to furnish validation of this occupancy percentage (usually in the form of a recent rent roll).

Sep 8, 2010
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Bernice H.
Owner/Investor
Oklahoma City, OK

Anthony,
There is probably no bank in existence that will finance this for you because you are unemployed. I am not in the consulting business but I am being tutored by someone who has tremendous experience and can show you how a private investor will finance you. Write to me at bvston56@aol.com and I will give you the name.

Sep 18, 2010
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Jeff R.
Lender/Mortgage Broker
Birmingham, MI

As someone that does commercial financing all day long, 35% is the minimum down payment right now on a non multifamily investment property - ie with bank financing. It would be very very rare to find 70 - 75% financing right now.
Your lack of personal income will likly be a problem. Underwriters do whats called a global cash flow analysis. This is where they net out your personal; expenses out of what ever income you do have.

Dec 24, 2010
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