FBC Funding offers Multi-Family Rehab Loans for Investors looking to purchase, refinance or cash out refinance their apartment builds to improve their investment properties, which would increase their cash flow and increase their value. Whether the real estate investor is looking to sell the property or hold it for cash flow and appreciation we can help with funding. FBC Funding offers many multi-family rehab loan programs, here are the guidelines for two programs.

General Requirements for Multi-Family Rehab Loans

Multi-Family Rehab Loans have similar guidelines to residential rehab loans. Residential and Multi-Family Rehab Loans both require experience, credit and liquidity. The difference being residential programs are more flexible with experience, credit and liquidity. As a result it is easier to qualify for a rehab loan on a one to four unit property than a property with five or more units. The biggest reason the one to four unit property is easier to qualify for is that there is a much greater market for these properties. Therefore, financing for one to four unit properties is less stringent and carries less risk of loss to the lender. Experience is the biggest difference, in that some one renovating, owning or managing an apartment building has to have a different skill set the some one renovating, owning or managing a single family home. Below are two of many program guidelines for multi-family rehab loans we offer.

Core 3 Multi-Family Rehab Loans Guidelines

• Minimum Loan Amount:       $500,000
• Maximum Loan Amount:      $5,000,000 (more by exception)
• Maximum # of Units:               10 or more by exception
• Maximum initial Leverage:     75% Purchase, or 65% for Refinance
• Maximum Rehab:                     100% up to 70% ARV
• Maximum Rehab Budget:        50% of Purchase Price or As Is Value
• Maximum Loan To Cost:         80% of total As-Is Value plus Rehab
• Foreign Nationals:                    Acceptable – Maximum ARV is 55%
• Mixed Use:                                 Acceptable – Greater than 50% residential use and commercial income is 35% or less
• Loan Term:                                12 months – 18 months – 24 months with extensions not to exceed 36 months
• Minimum interest:                  9 months – 12 – months – 18 – months
• Liquidity:                                   15% of Loan Amount
• Experience:                               Must have 5 unit plus ownership experience
• Credit:                                        Minimum 680
• Recourse:                                  Full Recourse under $2,000,000 loan amounts
• Reserve Requirements:          Interest Payment reserves for shortage of operating expenses and mortgage payments

The advantage of this program is that it allows for as little as 25% down for purchase rehab of Multi-family properties for experienced owners of multi-family  and the rehab is covered at 100% up to 70% of the ARV. This is a good value add program that is not meant for major rehab of properties that are vacant and or with rehab greater than 50% of the purchase price. Good Pricing.

Core 4 Multi-Family Rehab Loans Guidelines

• Minimum Loan Amount:       $250,000
• Maximum Loan Amount:      $2,500,000 (more by exception and overlays)
• Maximum # of Units:               12 or more by exception
• Maximum initial Leverage:     80% Purchase, or 70% for Refinance
• Maximum Rehab:                     100% up to 70% ARV depending on experience and level of rehab needed
• Maximum Rehab Budget:        Light rehab – 50% or less of the as is value, Moderate rehab – more than 50% up to 100% of the as is value, over 100% of the as is value
• Maximum Loan To Cost:         80% of total Purchase Price or As-Is Value plus Rehab
• Foreign Nationals:                    Acceptable – Maximum ARV is 65%
• Mixed Use:                                 Acceptable – Greater than 70% residential use and commercial income is 30% or less
• Loan Term:                                12 months – 18 months extensions not to exceed 24 months
• Minimum interest:                  None
• Liquidity:                                   Down Payment, closing costs, 10% of rehab budget plus
• Experience:                               Must have 5 unit plus ownership experience
• Credit:                                        Minimum 680, 660 with 5% lower LTV, 620-659 by exception with strong compensating factors and lower LTV
• Recourse:                                  Full Recourse / limited recourse by exception
• Reserve Requirements:         10% of the rehab budget plus 6 months payments.

The advantages of this program is that it allows for as little as 20% down for purchase rehab of Multi-family properties for experienced owners of multi-family and the rehab is covered at 100% up to 70% of the ARV. This program is good for value add and major rehab. The minimum loan is $250,000.

All programs require experience of ownership of multifamily properties. Unlike 1-4 unit properties, there is a greater level of scrutiny as multifamily is a higher risk investment to the lender. Therefore, it is prudent that borrowers always have compensating factors. The two biggest compensating factors are experience and liquidity.

For more information or a quote on these or other Multi-Family rehab loans we offer

Call 888-848-3114

email info@fbcfunding.com

or schedule a free loan consultation by clicking here

https://calendly.com/fbcfunding/15-minute-loan-consultation

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Multifamily Value Add

 Multifamily Value Add 

For Multifamily Value Add, Real Estate Investors purchase rehab loans with low down payments are rare. We offer our standard low doc purchase rehab loan with as little as a 10% down payment of the purchase price up to 30 units for experienced investors. This program allows Real Estate Investors to increase the property value by improving the property and increasing rental income. Commercial Apartments are valued primarily based on cash flow. If a property owner increases rental income and reduce costs they not only make more money in the short term. The increased cash flow will instantly increases the property value. 

Multifamily Value Add and BRRRR 

The BRRRR real estate investment method is to Buy real estate and Rehab the property for at or below 70% of the After Rehab Value. Once Renovated, stabilize the property by fully Renting the property (90 days or more for properties of 5 units or more) and Refinancing based on the new After Rehab Value. This allows you to have your down payment returned and now you can Repeat the process and thus increase your portfolio even with the limited funds. This sounds great but with many programs this does not work for properties with over 4 units because conventional and typical hard money loans have underwriting criteria that hinders this investment option. Our Multifamily Value Add Purchase Rehab Loan program is made for real estate investors utilizing the BRRRR investment strategy. 

Multifamily Value Add Purchase Rehab Loan Advantages 

1. Low Down Payment: As low as 10% of the purchase price for experienced investors. This compares to 20% to 25% for conventional and most bank financing. 

1. 100% Rehab Funding: Most conventional and bank Funding options offer no rehab financing for commercial multifamily property. If you find one it is rarely 100% of the rehab budget. 

• Low Documentation Loan: The Multifamily Value Add Purchase Rehab Loan does not require income documentation of the sponsor as required by banks. 
• Reduced Ownership Seasoning: Most banks require 2 to 3 years of ownership before they will allow cash out based on the After Rehab Value of the property. This program only requires 6 months ownership for 75% Loan to Value cash out refinance based off the After Rehab Appraised Value or 4 months ownership seasoning for 70% Loan to Value. 
• More Lucrative: Commercial Multifamily properties with 5+ units are much more lucrative than 1-to-4-unit properties because the cost to purchase per unit is typically lower per unit as well as the cost to maintain. The profitability increases substantially as a real estate investor increases the number of units in a larger multifamily property. Simply put the return on investment is much better the more units you have per property. 

The Multifamily Value Add Purchase Rehab Loan is a great option for new or experienced real estate investor to build a very profitable portfolio of Multifamily properties in a brief period of time and with the least amount of money invested. Click here for the guidelines and terms of our Multifamily Value Add Purchase Rehab Loan program.  We also offer 100% financing for purchase and rehab of multifamily properties.

For more information call 888-848-3114 or email louisj@fbcfunding.com.

You can also click here to schedule a free loan consultation.

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Multifamily Value Add Purchase Rehab Loan 

Real Estate Investors can buy and rehab apartment buildings with as little as 10% down on two-to-twenty-unit residential and commercial investment properties. To qualify for the Multifamily Value Add Purchase Rehab Loan a Real Estate Investor must meet the experience, credit, and liquidity guidelines. In addition, the property must qualify based on condition, cash flow and after rehab value. 

Multifamily Value Add Purchase Rehab Loan Borrower Qualifications 

Experience: Experience is based on the number of properties a Real Estate Investor has renovated and sold in the last three years plus the number rental properties they currently own. To qualify for the highest tier and lowest down payment a Real Estate Investor should have experience of at least five properties renovated and sold in the last three years, and or rental properties currently owned. 

With a minimum of five properties as Experience (all of which do not have to be multifamily) a borrower could qualify for ten percent of the purchase price as a down payment. With Experience of one or more properties a Real Estate Investor could qualify for a down payment of fifteen percent. With no experience a Borrower would qualify for twenty per cent down payment on a two-to-four-unit property and twenty-five percent down payment for five-to-twenty-unit properties. 

CREDIT: The minimum credit score required for the MULTIFAMILY Value Add Purchase Rehab Loan is 620. To qualify for the minimum down payment a borrower should have a 700 or higher credit score. If the credit score is lower than 700 the minimum down payment is increased by 5 percent. 

LIQUIDITY:  If a Real Estate Investor has experience of less than two rental properties owned and or completed renovation properties sold in the last three years then we require a six months of mortgage payments as an escrow for any projects greater than 5 units. This is in addition to verifying the down payment and closing costs for the Multifamily Value Add Purchase Rehab Loan. We will verify six months of mortgage payments as reserves for every loan over 5 units, but the escrow is not always required. 

PROPERTY CONDITION: The Multifamily Value Add Purchase Rehab Loan is a Value-Add Loan, not a major rehab program. Therefore, the renovation costs should not exceed forty percent of the total loan for properties of five or more units (exceptions can be made for very experienced investors with good credit and liquidity).  

CASH FLOW: There is no minimum cash flow prior to the completion of the Value-Add Rehab. But the stabilized cash flow should be at least 1.3. This means the net operating income of the stabilized multi-unit apartment building should be one hundred and thirty percent of the mortgage payment. 

AFTER REHB VALUE: The maximum loan cannot exceed seventy-five percent of the after rehab value for the Multifamily Value Add Purchase Rehab Loan. If the Real Estate Investor has a 700 credit score the maximum is seventy percent and sixty-five% below the 700 credit score. This means the loan amount cannot exceed the respective percent of the after-rehab value.  

Multifamily Value Add Purchase Rehab Loan Terms:

This is a short-term loan for 12 to 24 months, requiring monthly interest only payments like most renovation and construction loans. The rates start as low as 7.5% with an origination fee of two to three percent. The terms depend on the Real Estate Investors Experience and Credit.  

For more information call Louis at 888-848-3114 or email louisj@fbcfunding.com  

You can also click here schedule a free loan consultation.

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