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  • ­čĆŽInvestor Guide for beginners getting commercial loans

    Posted by Bryan Chavis on March 25, 2023 at 4:25 pm

    “8 Steps for Beginners to Acquire Their First Commercial Loan for Multifamily Investing”:

    1. Determine your loan purpose: Before you start searching for commercial loans for multifamily investing, determine the purpose of the loan. Do you want to purchase a property, renovate an existing one, or expand your portfolio?

    2. Check your credit score: Your credit score plays an essential role in getting approval for commercial loans. In 2022, the average credit score for multifamily investors was 680. Make sure you have a good credit score, as it will increase your chances of getting approved.

    3. Prepare a business plan: Lenders want to see a well-prepared business plan that outlines your goals and how you plan to use the loan funds. According to a 2021 survey by the National Multifamily Housing Council, 94% of lenders require a business plan. This will help you make a strong case for your loan application.

    4. Shop around for lenders: It’s essential to shop around for lenders and compare their rates and terms. According to a 2021 survey by the National Multifamily Housing Council, 65% of multifamily borrowers obtained financing from a local or regional bank. Look for lenders who specialize in multifamily loans and have experience working with investors like you.

    5. Prepare your financial documents: Lenders will require you to submit financial documents like bank statements, tax returns, and financial statements. Make sure you have these documents ready and organized. In 2022, the average down payment for a multifamily loan was 22%.

    6. Apply for the loan: Once you’ve found the right lender, you can begin the loan application process. Make sure you submit all the required documents and provide accurate information to avoid delays in the approval process.

    7. Review the loan terms: Carefully review the loan terms and conditions before signing the loan agreement. Make sure you understand the interest rates, fees, and repayment schedule. In 2022, the average interest rate for a multifamily loan was 3.95%.

    8. Use the funds wisely: Once you’ve received the loan funds, use them wisely for the intended purpose. According to a 2021 survey by the National Multifamily Housing Council, 69% of multifamily borrowers used the funds to purchase a property. Make sure you keep track of your expenses and make timely payments to avoid defaulting on the loan.

    Remember, acquiring your first commercial loan for multifamily investing can be a complex process, but with proper preparation and research, you can increase your chances of getting approved and achieving your investment goals. By following these eight steps, you’ll be well on your way to securing your first commercial loan for multifamily investing.

    Bryan Chavis replied 3 weeks, 3 days ago 3 Members · 3 Replies
  • 3 Replies
  • Karen Flower

    Member
    March 29, 2023 at 9:29 am

    Great information!

  • Francisco Rivera

    Member
    March 29, 2023 at 2:18 pm

    When they look at financial docs I assume they are looking to see if you can afford the down?

    • Bryan Chavis

      Member
      May 4, 2023 at 12:44 pm

      Yes, amongst a few other things, mainly your source of capital your ability to repay the loans and your ability to operate the project