Apartment
This page addresses loans specifically for Residential Apartment properties. These are properties with 5 or more living units and do not include any other commercial activities on the property.
Historically apartment loans are viewed as a hybrid between traditional single family loans and true commercial loans. With the recent changes, we are seeing a push towards a more formalized commercial mode of lending.
Traditional commercial loans for apartment:
For apartment loans, confusion will increasingly become the expected. As examples, some lenders will require the property to be in an entity, some won't. Some will demand recourse notes, others may negotiate. Each lender will have its own specific guidelines to determine if they will lend. Some will reject out-of-state owners outright, while others' will require a substantial banking relationship. Thus, it should be clear – The norm will be the lack of the predictable. For investor’s the importance of people like me, who know commercial lenders – their lingo and the new rules and regs, will become needed and necessary. This means that for investors, their will be an increasing need for people like me to help steer the way to success.
The next hurdle to overcome will concern the length or term of your next loan. For strong clientele, fully-amortized loans maybe offered. For others, they should expect loans good for 5 to 10 year with a balloon payment.
Bottom line: Lenders are deciding to view apartments in the same manner as they do all other commercial paper. What this will mean is more and more, apartment loans will be underwritten with guidelines of traditional commercial mortgages.
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