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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