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The Ultimate Guide to Getting a Multifamily Loan

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Did you know that CBRE forecasted that the multifamily investment volume will reach $148 billion in 2021? That number has probably increased far more in 2022.

If you are a real estate investor, then it’s a great time to look into a multifamily loan. Don’t know what these are? Read on for a brief overview of getting a multifamily real estate loan.

What Are Multifamily Loans?

Multifamily loans are when you apply for a loan to purchase or refinance small multifamily unit properties of 2-4 units, or large apartment complexes with 5 or more units. A lot of real estate investors balk at the idea of getting a multifamily loan because they think it’s out of their reach.

But in fact, multifamily loans are quite affordable and come with a lower interest rate with better terms than traditional mortgages for single-family units.

Four Types of Multifamily Loans

There are four types of loans you can get for multifamily units. They are:

  • Conventional mortgage – a traditional mortgage for a multifamily property with 2-4 units
  • Government-backed mortgage – best for owner-occupied multifamily properties with 2-4 units
  • Portfolio loan – if you can’t qualify for a traditional mortgage or wish to finance multiple properties at once
  • Short-term loan – for real estate investors who wish to fix and flip distressed multifamily properties

As you can see, you have quite a few options when wanting to get a multifamily loan to add to your investment portfolio. Discover more here about multifamily loans from LendSimplii.

How to Apply for a Multifamily Loan

Applying for a multifamily loan has a similar process to when applying for a small business loan. You have to prove that the property is a viable investment and that you have the proper setup in your personal and business finances to make such an investment.

Some documents you should bring with you to the loan office are:

  • Property details – where it’s located, the number of units, is it occupied or not, etc.
  • Property finances – the current operating statement, rent roll, and any other relevant details
  • Personal finances – a personal finance statement detailing your proof of income and any reserves

Once you collect all these documents, make sure to book an appointment with a mortgage company asap, so you don’t have any delays in getting your mortgage approved. You don’t want to miss out on a great multifamily unit because you weren’t able to get the mortgage approved on time.

Getting a Multifamily Loan Isn’t as Hard as Expected

If this is your first time hearing or learning about a multifamily loan, you might be surprised at how easy it is to start applying for one and even getting approved for one. All you need to ensure is that both your personal financial statement and the property’s operating statement make sense.

Interesting in learning more about real estate investment? Keep reading through our blog.

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