So, you’ve searched like crazy to find a deal. You were bold enough to submit your LOI. Now it’s accepted and you’ve got to figure out your capital stack. Financing multifamily properties (over 5 units) is a little different from a single family house.
Typically the interest rate is higher, the amortization period is shorter, and there is usually a ‘term’, this means your loan is due in full (balloon payment).
For smaller loan amounts (under $1M) local banks and credit unions are a good option. They like to support their community and these portfolio loans are a great revenue source for them.
But, if you’re an out of state investor, how do you get them to approve you?
Relationships Matter
Leverage your local relationships! You’ve already got a Property Manager, right? If not, start interviewing immediately. Once you’ve narrowed down your list, ask them who they use for their operating accounts / and or their own investments (always pick a PM that is also an investor) and if they can provide an introduction.