investing in multifamily apartments, Part 4
We have been sharing some of the key components of the “Secret Sauce” the Barriskill Investment Group uses to introduce multifamily apartments as investment opportunities to our private investor community. So far, we’ve talked about (1) Evaluating Candidate Properties, (2) Detail-Diving and Making an Offer, and (3) Bringing in the Professionals¸ all of which have been posted to the company website for your reference.
Today, we will focus on our forth (4th) aspect:
Applying for a Loan
Always a topic of pleasure for any real estate transaction — qualifying for a commercial real estate loan, which is typically what you do to purchase a multifamily apartment property, is an exhaustive exercise in credit worthiness and providing massive amounts of documentation. (Sound familiar?)
Following the 2008-2009 Financial Crisis, loan qualification became considerably more complex. Prior to that time, multifamily apartment properties were generally viewed as being self-sufficient, stand-alone business operation, generally requiring documenting the basics with a solid balance sheet, an accompanying profit & loss statement, a company resume, etc. to secure the loan.
With the sudden and wide-spread unemployment of the late-2008/early-2009 time frame, lending institutions were not prepared for the loss of revenue apartment projects experienced caused by the sheer volume of people that could no longer afford to pay rent.
Today, these same lending institutions require us to qualify/vouch for the profitability of the multifamily apartment projects we undertake. Extensive disclosure of personal income tax return history with a personal financial statement and additional, detailed disclosures are now required. Lenders also require clear evidence, with extensive accompanying documentation, showing that we (the borrower) understand the multifamily apartment business well enough for them to have the confidence they need for the loan approval process to move forward.
By the way – the reports and documentation we’ve talked about are required by the lending institution to protect their interests, which by definition, also protect our interests. While we believe multifamily apartment investment opportunities are perhaps the safest form of commercial real estate investing in today’s economic environment, lending institutions will not underwrite a loan application unless they have the same (or greater) level of confidence in the multifamily apartment investment opportunity as we do.
Next week, we will talk about Funding the Loan’s Down Payment.
We want each member of our private investor community to build predictably consistent cash flow through multifamily apartment investment opportunities so they can achieve a financially stress-free retirement. Reply to this eMail or call us for more information on how you might become a member of our private investor community so you can begin to realize these potential benefits.
Our kind regards,
The Barriskill Investment Group.