Multifamily properties are becoming popular investments, and these investments are often considered the safest and most attractive to real estate investors.
In the past, qualified borrowers used traditional loans to finance their multi-family investments. Today, more choices are available, including multi-family hard money loans from private money lenders like us. Learning about multifamily hard money loans from a hard money lender is essential for investors who want to purchase these types of properties.
What Are Multifamily Hard Money Loans?
Those who want to invest in a multifamily property need to know what a multi-family hard money loan is and what it can offer them. Hard money for multifamily establishments is a type of real estate investment offered by a private money lender.
Multifamily hard money loans are an ideal tool for commercial real estate investors. It is important to note that once an investor obtains a hard money loan, they can then turn around and refinance the multifamily loan amount with a traditional loan.
What Are the Benefits of Multi-Family Hard Money Loans?
Investors considering obtaining multi-family hard money loans need to learn about the benefits of these loans to decide if this is the right financing option for their investment needs.
Consider the following if you want to pursue a hard money loan for a multi-family property, such as an apartment building or condos.
- The loan amount is determined by the value of the property and not the worthiness of the borrower.
- The process of closing is much faster and offers an alternative capital source. With a traditional bank loan, closing can take 45 days or more. Hard money loans can close in ten days or less.
- A hard money loan from a private company has few borrower qualifications.
EXAMPLE LOAN SCENARIOS
Sample Multi-Family Hard Money Loan
Your offer might look a little different than below, but this sample should get you started on better understanding what you can expect if you seek a hard money loan with us. Do not hesitate to contact us right away to learn more.
- Size of the loan: $50,000-$15,000,000
- Term of the loan: Between six months to three years
- Interest rate: Interest rates start from 7% and higher
- Origination fee: Between 2% to 5%
- Amortization: Interest only, though sometimes deferred payments is offered
- Maximum LTV: determined on a case by case basis
What Are the Disadvantages of Multi-Family Hard Money Loans?
As with any loan, there are going to be some disadvantages. Hard money loans are not always appropriate for every borrower. You should be aware of the good and bad aspects of hard money loans so you feel fully equipped to make the right decision for your commercial real estate investment needs.
The following are the top disadvantages of these loans.
- These loans typically have higher rates than traditional bank loans.
- These loan programs have the highest closing costs.
- There is a risk of losing the property if a payment is missed.
- These loans have a short period with a balloon payment.
- These loan programs are generally full recourse loans.
While the above may seem like deal-breakers, there is a reason so many real estate investors rely on hard money loans when purchasing multi-family properties.
Most real estate investors want to scoop up properties and start repairs as soon as possible. You may have borrowing needs that traditional banks do not accept.
If you choose a hard money loan, it is in your best interest to work with the lender on the loan terms to understand what you are required to repay. Avoid lenders that offer arbitrary lending criteria. Missing payments is not an option, though some private money lenders occasionally offer deferred payments.
MORE EXAMPLE LOAN SCENARIOS
FAQ About Multi-Family Hard Money Loans
If you’ve been considering one of these loans, you may have some questions. The following offers answers to some of the top questions regarding multifamily financing. Do not hesitate to contact us with any questions you have.
How Can I Increase my Chances of Getting Approved?
Although they have higher interest rates, there are legitimate reasons why investors flock to multi-family hard money lenders. Most investors want to close quickly, and waiting 45 days or more is not an option in a competitive market. A multifamily loan scenario allows investors to receive cash flow to purchase properties when they cannot get approved for traditional financing.
Get Pre-Approved for Your Loan Today
Are you a real estate investor interested in purchasing a multi-family property? If you answered yes, fill out an online pre-approval application. The process is simple, and you could be approved faster than you thought possible.
Our goal is to help real estate investors like yourself receive multifamily funding on the full loan amounts. We can help with services related to multifamily properties, single-family properties, rental properties, flip loan requirements, refinance assistance, and lending on other property types.
Our goal is to help you get the fast money you need right away. With full transparency and help with every step in the process, when you need a hard money lender you can rely on the financing information we provide.
Although it is much easier to get approved for a hard money loan than bank approval for a conventional loan, you need to be prepared to talk to an underwriter. They will ask you questions about the investment property and your experience as a real estate investor. Get prepared in advance.
Should I Be Concerned About the High Rates?
Before applying for a hard money loan for a multi-family property, you need to understand that private lenders often have interest rates that will be higher than bank loans. The convenience of hard money financing does come with a price. Typically, multi-family loan rates are around 3-5% higher.
Can I Get Approved With Bad Credit?
Bad credit will not prevent you from getting approved for a multifamily loan. Private money loans are considered asset-based lending. The borrower’s credit score and ability to provide tax returns are less important than the value and strength of the investment property you purchase. Do not be afraid to approach us with bad credit.
Why Are Hard Money Loans Better for Real Estate Investors?
Although they have higher interest rates, there are legitimate reasons why investors flock to multi-family hard money lenders. Most investors want to close quickly, and waiting 45 days or more is not an option in a competitive market. A multifamily loan scenario allows investors to receive cash flow to purchase properties when they cannot get approved for traditional financing.
Get Pre-Approved for Your Loan Today
Are you a real estate investor interested in purchasing a multi-family property? If you answered yes, fill out an online pre-approval application. The process is simple, and you could be approved faster than you thought possible.
Our goal is to help real estate investors like yourself receive multifamily funding on the full loan amounts. We can help with services related to multifamily properties, single-family properties, rental properties, flip loan requirements, refinance assistance, and lending on other property types.
Our goal is to help you get the fast money you need right away. With full transparency and help with every step in the process, when you need a hard money lender you can rely on the financing information we provide.