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Multi-Family/Apartments Commercial Loans



Multi-Family- A commercial multi-family property consists of 5 or more attached residential homes such as an apartment complex. If the property is under 5 units it is typically considered a residential home and thus is not eligible for commercial financing.

The benefits of owning a multi-family property can include the fact that the regular tenants in your building are paying down your mortgage each month, thus reflecting

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more financial equity in your personal financial statement. And, if the lease agreements are structured properly, the tenants can also be responsible for maintaining the property and paying the taxes and insurance as well, thus making your net operating income for the property even much stronger. Below we have outlined more specific financial benefits for you.

Benefit #1- Minimize Cash Flow Risks- If you own a 6-unit property and for some reason you lose two of your tenants, you are still collecting 4 monthly rent checks to help you make your mortgage payment while you look for new

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tenants. However, if you own and rent out a single-family residence property and lose your tenant, you will be without ANY income to pay that mortgage payment until you find a new tenant. You always run the risk of losing a tenant at some time or another, but with multi-family properties you are able to better distribute the potential loss amongst many tenants rather than just one. Because of this you are in a better cash flow position and thus you may easily be able to afford to hire a property management company to take care of the day-to-day issues and the maintenance that your property will require. This makes your life as a landlord MUCH easier.

Benefit #2- Minimize Operating Costs- If you have a leak in the roof of your 6-unit building, you only need to fix ONE roof instead of having six roofs in need of repair

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if you own 6 single-family residences. This also applies to other common areas that require some maintenance costs such as lawns and walkways. With a 6-unit property, 2-3 washers and dryers would be sufficient for all 6 tenants, whereas if you were to own and rent out 6 single-family residences you would need to provide a washer and dryer for each one of those homes. You can see how the operating costs can build up very quickly this way and easily lower your profit margin.

Benefit #3- Greater Demand- With bankruptcy filings and foreclosures at an all-time high, more and more people are being turned down for financing for a home of their own. Additionally, the “Generation X” populous are now leaving their parents homes and entering the work force. This makes for a high demand for affordable apartment housing. Apartment housing is typically the first option for many people and the last resort option for many others.