201674 Resource 196070 165387 165387 1208036612442 1208043068234 Controlled Phoenix Multifamily Investments 101, Financing

Financing Phoenix Apartment Investments

<p align="left"><strong><font color="#990000">Part 1: <a title="part one of Phoenix multifamily Investing 101" href="item/201666" target="_blank">Multifamily Investing: Purchasing</a></font></strong></p><p align="left"><strong><font color="#990000"><font color="#000000">Part 2 below discusses Financing Phoenix apartments</font>.</font></strong></p><p><strong>Financing</strong>: Usually a residential loan is sufficient for buildings with one to four units, while a commercial loan is necessary for buildings with five+ units.&nbsp; Residential financing has less stringent guidelines and is based more on borrowers financial status while commercial financing puts more of the burden of the performance of the property.&nbsp; Typical financing for one to four units will require 20-30 percent cash down but 10% may be possible as well, fees vary, but usually average around 2-4% percent of the purchase price. <br />To add larger investment properties to your real estate portfolio you need to apply for a commercial loan, which has different underwriting and approval processes.&nbsp; Commercial loan lenders are much more interested in profit and loss histories for the project itself. That can make convincing your bank to give you the money based on forward-looking projections more difficult, but its often easier to get a larger loan then a smaller one.&nbsp; If possible, you should provide at least a 2-5 year historical report of income and expense data with your application package. Get this from the seller and compare it against current market conditions.</p><p>Commercial loan lenders prefer to do larger loans so it may be difficult to find financing for smaller amounts. That means you&rsquo;ll either have to think bigger and spend more upfront or shop around until you find a bank willing to finance smaller deals.&nbsp; Some local banks will do smaller loans.&nbsp; Lenders tend to look at all cash flow including the amount of money you have in reserve.&nbsp; Lenders will also look at other costs you&rsquo;ll incur besides the mortgage; including taxes, regular maintenance,management fees, vacancy rates, and deferred maintenance.&nbsp; Banks need to see an ability to make repayments.&nbsp; Most lenders will have a set income to debt ratio, called debt service coverage ratio.&nbsp; A DSCR of 1.0 means for ever dollar of income there is a dollar of debt repayment. Expect most lending institutions to require a DSCR of at least 1.25&nbsp; before they consider a loan viable.</p><p>Let us know if you have specific questions about investing in apartment buildings.</p><p>Part <a title="Cash Flow properties in phoenix" href="item/201678" target="_blank"><strong>3 is about the good part; Cash Flow</strong></a>.<br /></p> 9 application/xml false Investing in multifamily Phoenix apartments for sale Phoenix multifamily for sale Phoenix real estate Phoenix real estate investing Phoenix Apartment Investing. item/201666 Financing Phoenix Apartment Investments item/201674 Cash flow from Phoenix income properties. item/201678 It's not about location, location, location! item/196017 Phoenix multifamily properties as an investment versus houses. item/198854 Mozilla/4.0 (compatible; MSIE 7.0; Windows NT 5.1; .NET CLR 1.1.4322) 127.0.0.1 127.0.0.1 aciesielski 98.165.109.170 false true false false true 176502 false false true false false false true 196070 blog blogsite/ArturCiesielski/web