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6 Unit Apartment
What loan program the borrower can qualify for a 6-unit apartment (Purchase)? What are the documents needed?
728 FICO with experience renting out properties (currently have 4 other rental properties). -
32 Replies
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I used to own, manage, and operate seven apartment complexes. Each apartment complex consist of an average of 400 units. I started with an eight unit apartment building. Apartment buildings is the safest form of commercial investment. First and foremost, the borrower needs to get a personal financial statement. Normally, all commercial loans for apartment buildings follow the same format. Get a Executive Summary Sheet: Borrower’s background, and resume. Experience in real estate, and what the scope of work is. What he wants to be when he grows up. Why should a commercial lender approve his commercial loan request for the apartment building and why the lender should be rest assured the borrower is not going to default. Amount of down payment he is putting down, cash reserves, whether he is going to manage the apartment building himself or hire a professional property management company. The executive summary sheet does not have to be long but need to state the purpose of the loan, and the scope of work. Personal financial statement forms are all basic and similar and you can get sample template online or ask Dianne for one. Second, you need to get the rent roll of the property and profit and loss.
Qualifying for a loan program to purchase a 6-unit apartment building will depend on various factors, including your credit score, income, down payment, and the specific requirements of the lender and loan program. With a 728 FICO score and experience renting out properties, you may have several options available to you. Here are some common loan programs you might consider, along with the typical documents needed for commercial loans:
Credit Score: A FICO score of 728 is generally considered good for commercial loans
Down Payment: Typically, you’ll need at least a 15% to 25% down payment for a 6-unit apartment building. Down payment requirements for commercial loans can vary but are often higher than residential loans.
Documents Needed: You’ll typically need to provide documents such as:
- Business plan
- Cash flow projections
- Business tax returns
- Personal financial statements
- Property information and appraisal
- Lease agreements (if applicable)
- Environmental reports (if required)
Proof of income (tax returns, W-2s, pay stubs, rental income documentation)
Bank statements
Proof of assets
Credit report
Property appraisal
Purchase agreement
Personal financial statements
It’s essential to shop around and compare loan offers from different wholesale lenders to find the best terms and rates that suit your needs. Additionally, your rental property experience can be an asset when applying for loans, as it demonstrates your ability to manage income-generating properties.
Remember that lending requirements and programs can change over time, so it’s a good idea to consult with Dianne or several wholesale commercial lenders just like residential loans to discuss your specific financial situation and loan options.
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Felix, initially you just need the executive summary, current profit and loss and projected profit and loss. Find out if the apartment building needs work or the apartment building is stable. If the building needs work, then we should get him a short term acquisition and renovation loan. We can do this without him putting a lot of money down and cross collateralize his other rental properties. Need detailed description of the building. Address, number of legal units, type of building (ONE STORY, TWO STORY)
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Great information 👍. Thank you for sharing your information about commercial lending on apartment building loans.
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What is recourse and non-recourse commercial loans?
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What is the least down payment needed to get a six unit apartment building commercial loan with no landlord experience
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The minimum down payment for a six unit multi family apartment building is 15% to 20%. You can become eligible for commercial loans on apartment buildings with zero experience if you intend on hiring a property management company.
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Minimum down is 25% for 5-8 Units for DSCR!
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This reply was modified 1 year, 1 month ago by Cameron.
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Regardless of the ratio? or should it be 1:1?
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Felix, contact Cameron LeClair of The Lender. He told me he does investment building including apartment building over 4 units. Let’s price out this borrower on the six unit. Send all docs to Cameron the Man and we will see what he comes up with. Thanks.
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Hello Felix,
Yes, we would need a 1:1 ratio on the 5-8 units DSCR product
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This reply was modified 1 year, 1 month ago by
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Cameron LeClair does 6 unit multi family apartment building
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1.1 if market tenants. 1.7 if section 8.
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We can shop this file with various commercial lenders for the best rate and terms because every lender will have the DSCR factor different from each other. We need to see what type of deal is in the best interest of the borrower.
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i agree! have Felix call me already!
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