Got Funding? Get Creative!

Funding for multifamily properties can be one of the highest barriers to entry in the real estate business. I remember the very first time I walked into a lender’s office (summer of 07). You might think I would be nervous, but NO, not me! I waltzed right into the commercial lenders office at the bank that I had been keeping my (unimpressive) checking account at for the last few years, sat down, and began to explain my big plans for my future in real estate.   Note- Something I learned much later in life, is that if the person you are speaking to, is staring off into space or looking fixedly at the Ficus plant in the corner of their poorly decorated, mid-level managers office… they don’t give a damn what you are talking about.   The lender was actually polite enough to let me drag on about the 100-unit deal I had brought him to look at. When I was done with my Oscar-winning pitch, including full-color pictures of the property, he gently leaned forward in his seat and looked me in the eye, and said…  “Who do you think you are? What money do you think you have to put down on this multimillion-dollar deal? What experience do you have, that you think qualifies you, to buy/borrow on such a large deal? Thank you for your interest in our institution, but we are in no way interested in your loan application. Have a nice day.”  That was the end of that conversation. I walked out of that guy’s office feeling about six inches tall. True story.   I wish I could say that I shrugged it off and went right out into the real estate world and built a huge portfolio and became successful besides his admonition. Truth be told I went home super pissed off. Yes, I did eventually do all those things, but not before getting set back mentally and emotionally.    If you have been in the real estate business for a while, I bet you have a similar story of your own. It’s normal. What followed was the next 17 years in the multifamily business and the building of a large portfolio and management company. I survived the Great Recession by mastering the techniques of creative financing such as seller financing, master lease options, and raising private capital just to name a few. I have seen days like this before.   Now we are entering into a similar time in the lending/economic market (like just before 2008). Rates are high and prices are high too. That is a combination what will either result in prices coming down or downpayment going up. The third option is creative financing for multifamily. Using techniques like master lease options or seller financing.   Master Lease Option  A technique to control the operations and future sale of a property with the use of 2 contracts.  The Master Lease- this contract is a rental agreement between you and the seller of a property giving you the right to rent the entire property with the right to sublease the units to the tenants.  The Option Memorandum- this contract sets the price that you and the seller have agreed on and the time in which you have the exclusive right to buy the property at the agreed upon price.  Use this when a seller has a mortgage on the property.  Risk- you have the rights of a renter not an owner.Seller Financing  This is as simple as it sounds. The seller will be financing (holding a mortgage on) the property they are selling you. Instead of receiving all cash at closing (usually funded by the bank loan + downpayment) the seller will receive a lien against the property. Just a bank loan the seller will have to foreclose on you if you don’t make the scheduled payments.   The deed will transfer to you after a regular closing (title company/lawyer).  The seller must have full equity to transfer the title.  Loan terms (length, rate, downpayment) are all fully negotiable.  Give on price, take on terms!    I used these techniques to build by first portfolio. Creative financing for multifamily will be one of the most talked about topics in the near future. Why? Because it works when traditional debt is not an option, but the seller still must sell.   If you want more info, check me out the Education (to be hyper-linked) section of our website where I have free courses teaching you how to:  How to Get Creative Financing for Real Estate Deals  Use Master Lease Options  Get Seller Financing Get Brokers to Find You Creative Deals Negotiate Creatively Much More

Pros And Cons of Section 8 For Real Estate Investors

Section 8 housing has been controversial with real estate investors since its inception in the 1930s as a response to the Great Depression. The program has evolved ever since, and today its main purpose is to provide low-income Americans with subsidized housing. There’s a lot to consider about the program in general, including the pros and cons for real estate investors.

Pro: Stable Rent Payments

This is perhaps the biggest advantage of the program. Landlords can count on getting 70%-100% of the rent from vouchers given by the government. There are, of course, glitches in the payment system at times, but while it can take time for these payments to come through, they do always come.

The real advantage here is the possibility of mitigating some of the risks in getting tenants who don’t pay reliably. The 2020 pandemic has also highlighted situations where it could be possible to have difficulty collecting rent from even the most reliable private tenants even after the most stringent background checks.

Otherwise reliable tenants are being furloughed from their jobs unexpectedly, through no fault of their own, and state governments are even issuing regulations forbidding evictions during the pandemic or putting a halt to all public hearing evictions.

Pro: Incentives

Naturally, any investor is hoping (and actively looking) for tenants who will take care of their property, but the definition of “maintain” can be open to interpretation and vary from place to place. One of the advantages of getting a Sec. 8 tenant is that their obligations are laid out specifically in the law. Since violating these regulations means a tenant risks losing eligibility for the program, there’s at least some incentive against actively damaging a unit.

Pro: Long-Term Renters

This is a general rule and not a given, but renters under this program tend to stay longer than private pay tenants, and especially if they like the management or landlord and the property itself. This can mean lower vacancy rates.

Pro: Large Pool of Renters

As of the government’s latest accounting, there are 10.4 million people and 5.4 million households participating in the program. For properties in a geographic area with a smaller pool of private paying tenants, this can be a serious advantage.

For would-be investors, it’s always wise to look for properties in locations with lots of jobs and the kind of amenities that draw a good pool of responsible private renters. For property owners who are already stuck with a property in an area where it’s difficult to rent, Section 8 may be something to consider.

Con: Dealing With Bureaucracy

Perhaps the biggest disadvantage when dealing with any government program is the vast amount of red tape involved. It can be enormously costly to qualify your property and maintain it to the standard, and all the bureaucracy is one of the biggest reasons for this. There are inspections to arrange, lots of paperwork to fill out, and some stringent owner responsibilities that have to be followed at every step.

Con: Payment Delays

While payments are reliable, there can be delays, and there’s little you can do about this. When a tenant initially moves in, the first payment from the government won’t even show up for 30-60 days. This is not in itself an insurmountable issue, of course, as the prepared investor can work around this. It is very important to be aware of this, however, and to factor it into all calculations regarding cash flow and profitability.

Con: Constant Inspections

The inspection form and checklist from the Housing Choice Voucher Program is enough to highlight this disadvantage. Even some of the best rehabbers can fail their first inspection since HUD is notoriously strict. It’s often easier to rent property to private tenants for this reason alone.

Con: Increased Wear and Tear

While the Sec. 8 rules do have specific penalties that incentivize tenants against damaging property or appliances, it’s also more common to see higher wear and tear on a property with tenants from this program.

Some tenants clearly feel less invested in a property when they pay little or even none of the rent. Naturally, there are some very careful and responsible Sec. 8 tenants just as there are unreliable private tenants: but the general trend is for greater wear and tear on properties.

Con: Difficulty Dealing With Delinquent Tenants

The positive of renting under this program is that the majority of the rent is guaranteed by the government. The downside is the difficulty of going through the convoluted and lengthy eviction process should the tenant become delinquent on whatever portion of the rent they are responsible to pay.

In these cases, it’s not unheard of for landlords to simply settle for less profit rather than try to go through the bureaucratic process of getting the tenant removed, which is followed by another lengthy navigation of red tape to get a new tenant. Private renters can also be delinquent, of course, but the process of removing a private tenant is normally going to be less costly.

Con: Little Recourse for Damage

While incentives are there to prevent major damage, that’s not the whole story. The nature of the program means that most participants will not be financially able to pay for any damage they might cause to the property. Often the only real recourse is for the landlord to charge higher rent and attempt to recoup the losses that way.

The Upshot

Overall, HUD’s housing program is a risky venture for an investor, and for most, the cons will outweigh the pros. While there are some advantages, there are even more disadvantages and risks inherent to the program. For most property investors, choosing a good location and rehabbing it well means you’re likely to make more renting to private individuals.

This doesn’t mean it’s impossible to turn a profit with the Sec. 8 program, and some landlords have done very well. What it does mean is that it’s even more important than usual to know exactly what you’re getting into, do all your due diligence (and then maybe do it again), and seek advice from experts and local landlords before entering the program.

Florida Apartment Building Lending Purchase, Refinance and Cash Out

Jacksonville, Miami, Tampa and Orlando Florida apartment loans with low fixed rates, 80% LTV, 30-yr terms, flexible terms, interest only and non-recourse options

Maximize your Jacksonville, Miami, Tampa and Orlando Florida multifamily investment with an apartment loan or multifamily loan that meets your individual needs and investment objectives.

At Winston Rowe and Associates they provide Florida apartment loans with choice helping you make better decisions. Through their proprietary multifamily lending platform, they can quickly compare their many multifamily loan programs and lending platforms providing you with a Florida apartment loan with the best rates and terms.

Loan amounts from $1MM

Highly competitive interest rates

Interest rate locked at application

Partial and full-term interest only available

Non-recourse

Up to 80% LTV

30-year amortization

Fixed rates up to 30-years

Yield maintenance or declining prepay options

No replacement reserve requirements

This Year’s Renters Want More Space, Good Deals and the Great Outdoors

Winston Rowe and Associates

Renters are on the hunt for open-air amenities, more space, and a better deal in the city they already live in as 2021 unfolds, according to a recent RENTCafé survey on how renters’ preferences have changed as a result of the pandemic.

An improvement in lifestyle was the main driver for the more than 10,000 people who participated in the survey while searching for an apartment on rentcafe.com. The top features respondents searched for a year into the pandemic included open-air amenities (21%) and more space (20%)—data that stands in stark contrast to RENTCafe’s March 2020 survey, where top drivers were price and safety. In addition, space and open air amenities were more important to renters than WFH amenities like home offices.

The prospect of a better deal motivated 29% of respondents, while the need for a change of scenery prompted a quarter of those surveyed to move. And perhaps most interesting? Contrary to breathless pandemic-era reports of Americans ditching their cities for secondary markets, approximately 90% of renters were looking for long-term rentals with 48% looking to remain in the same city. A mere 4% of renters chose to move because they could now be more flexible by working remotely.

“This shows that improving housing conditions—not drastic change—is the goal,” RENTCafe notes in the survey findings. Of those surveyed, one-third (34%) reported they’d already moved once over the last year, with the majority doing so because of the pandemic.

“After months of staring at the same walls, it’s understandable that some people want to make a move now, if only for a change of scenery,” the survey findings note. “However, many of those who moved back in the spring of 2020 seemed to have done so out of need—not because they wanted to. More precisely, their reasons for moving during those uncertain early days of the pandemic were related to their lease being up or feeling financially insecure.”

The survey also revealed that space and open-air amenities were more important than work-from-home amenities. Only 10% said a good internet connection was crucial, and  5% said they needed a home office.

Despite this data, the multifamily industry is prepping to meet the demands of a growing body of WFH renters. Research last year from Newmark showed that multifamily owners are increasing floor plans to create more flexible spaces (think one-bedroom plus a den) and more outdoor space to accommodate workers who are staying home. The firm advises developers, however, to make more incremental changes to unit mixes and amenities since resident needs are still being hashed out as the pandemic wears on.

Source: globest.com

New York Apartment Demand Surges As The City Jumps Into Reopening Mode

Winston Rowe and Associates

A full year into the pandemic, New York City landlords are securing new leases at a rapid clip as depressed prices appear to be luring back—or holding on to—tenants willing to sign for the right deal.

New York buildings in Manhattan, Brooklyn and Queens, the number of leases signed during February beat a record set in 2012 during the comeback from the global financial crisis. The median rental price—lease value net of concessions—fell at least 11% across those boroughs last month, according to a new report by Douglas Elliman Real Estate.

The news comes as New York City slowly begins to reopen. Restaurants will soon be able to operate at 50% capacity and movie theaters are once again beginning to show films. It’s been a brutal year for the city; the seasonally adjusted unemployment rate stood at 11.4% in December, a 7.8% increase over December 2019.

Hundreds of thousands of New Yorkers fled the city at the onset of the pandemic, to ritzy enclaves upstate, quiet towns in the Northeast and other pockets of the country. The coming months will help reveal how many intend to return, and whether rental prices will subsequently increase.

In light of the revived demand, some owners are temporarily keeping units off the market in the hopes of a sustained rebound that may help them get higher rates sooner than expected. According to UrbanDigs, a real estate insights firm, in Manhattan landlords took more than 1,800 apartments off the market in February, as the Wall Street Journal reported earlier this week. For their part, renters are enjoying the reprieve from record prices, which peaked just before the pandemic.

Below is a closer look at the current New York City rental market, utilizing data from Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants.

Manhattan

Non-luxury units offer the best deals, with apartments of three or more bedrooms having the biggest year-over-year discounts, possibly a sign that after living through lockdowns, renters are looking to live with fewer roommates. The median rental price dropped 22.7% over the last 12 months on those units. Two-bedroom apartments are down 8.9%, while studios are down 19.3%.

New signings are up dramatically from February 2020, but the overall vacancy rate remains high, at 5%, compared to 2.01% last year.  More than 40% of new leases come with some form of landlord concessions, the authors said, often one or more months of free rent during the first year after signing.

Brooklyn

Brooklyn saw the “highest number of new lease signings since tracking began during the financial crisis,” Miller Samuel reports, at 1,834 for February, a 133% year-over-year increase. Still, the median effective rent dropped 16.3%, more than any other year in almost a decade. Nearly 40% of new signings last month included landlord concessions.

Studios are commanding the best discounts; median rental prices fell 18.8% compared to last February, while second place goes to apartments with three or more bedrooms, at a 12.5% decline. Still, a glut of inventory remains; there are 3,438 listings in Brooklyn, up from 1,375 a year ago. That figure doesn’t even account for units that have been pulled off the market.

Queens

The story is largely the same in Queens, where February also set a nine-year record. Inventory is up 64% compared to last year, and 36% of signings include concessions.

Overall, the median rental price dropped 13% compared to last February, to $2,522, with studios taking the biggest hit at a drop of 28.7%.

Source: forbes.com

Suburbs Apartment Rents Close to Their Pre-Pandemic Peak

Though the rental market in major cities has been hard hit by the Coronavirus pandemic—plagued with a mass migration by remote workers seeking larger homes, as well as relocations because of social distancing concerns—it appears that the suburbs have not just survived COVID-19’s wrath, they’re thriving in spite of it.

While rents have declined steadily in the larger, denser, principal cities at the core of each metropolitan region, rents in the outlying suburban areas have, on the whole, rebounded to pre-pandemic levels,” according to a new report from Apartment List.

From June through September, rents dropped in cities but “quickly rebounded” in the suburbs from losses that were seen from March to June across all of the property type’s markets, the report stated. In October, rents were 0.5% higher than they were at the start of the year, and came in just under their pre-pandemic peak in March.

Suburbs are outpacing cities across the country. In 27 of 30 large metropolitan areas tracked by Apartment List, “principal cities are experiencing faster rent drops or slower rent growth than their surrounding suburbs. And in 11, including major economic centers like Atlanta, Dallas, and Philadelphia, apartments in the principal city are getting cheaper while at the same time apartments in the suburbs are getting more expensive.”

The data jibes with other recent research concerning the impact of move-outs from cities, and the resulting strength of the suburbs. A recent report from Redfin showed that in the third quarter 29.2% of Redfin.com users looked to move to another metro area—the highest share since Redfin started tracking migration at the beginning of 2017. The uptick is partly due to the pandemic, Redfin stated, as well as the now pervasive work-from-home culture.

Short-term suburban rentals—which it defines as one-to-two-year lease terms—could be demand drivers for residents seeking work-from-home space and outdoor access. Suburban renters typically seek larger units, such as two-to-three bedroom apartments.

If this work-from-home trend is going to be a little bit longer term, people will feel more comfortable with moving out into the suburbs.

Efforts to socially distance also are fueling shifts away from major cities to the suburbs people just don’t want to be in enclosed, dense areas.

Six Trends to Watch for in Multifamily Property Management in 2021

Pandemic creates opportunities to rethink how best to serve residents.

2020 has presented the multifamily industry with unparalleled challenges due to the pandemic with the secondary and tertiary effects forcing the industry to quickly pivot to meet resident and prospect needs. However, the pandemic has also created opportunities for multifamily owners to creatively rethink resident retention strategies and communication and how to demonstrate value. While some external factors will remain uncertain as we transition into 2021, here are six trends we expect for the future of the multifamily industry:

1. Service Will Be a Secret Weapon

Next year, enhanced customer service will become the most critical component for demonstrating value and increasing resident satisfaction across multifamily communities. While efficiency and timely communication remain two essential strategies for solid customer service, expectations are on the rise as more residents work from home. Although some prospects and residents may continue to request face-to-face (albeit socially distanced) interaction, we foresee most leaning into digital communication via smartphone apps, emails, or text alerts for updates and ongoing communication with on-site teams. For multifamily operators, that means expanding your digital resources and increasing the frequency of communication in 2021.

This also means accelerating response times and prioritizing maintenance requests since many residents are still working from home and spending ample time in their living space. It’s important for on-site teams to prioritize quickly and efficiently, especially as the volume of requests increases and residents expect almost real time responses. What was once a minor maintenance issue can now quickly escalate into an unsatisfied and angry customer as residents are experiencing the maintenance issue for more hours of the day. As we continue into 2021, on-site teams will have to provide an enhanced experience by quickly managing requests, clearly communicating all updates, and going the extra mile to offer the best possible management experience.

2. Prioritize the Retention of Top Qualified Talent

Employing a highly skilled property management and maintenance staff is paramount to resident satisfaction and successful day-to-day operations. However, finding and retaining top talent will remain a challenge in 2021 for several reasons. Multifamily is a highly competitive and growing industry with a surplus of opportunity. We’re now seeing an excessive demand for experienced, trained personnel, but a labor shortage of qualified candidates entering the market. 2021 will continue to expose the need for more highly skilled and passionate staff members. The companies that succeed in attracting top talent do so by offering competitive salary packages; providing training, education, and support; and continually looking for creative ways to “surprise and delight” employees. Example perks could always include an appreciation day for the teams, flexible work hours, or an unexpected day off. Onboarding a professional, qualified, and capable team translates to resident satisfaction and long-term resident retention.

3. Looming Economic Uncertainty Clouds the Industry

Although this year brought economic uncertainty with changes in income and employment status, rent delinquency for multifamily hasn’t been as significant as anticipated. Research conducted by the National Multifamily Housing Council reflects a 1.1% increase in overall delinquency in September 2020 versus the prior year, with a 4.8% decrease in on-time payments. We’ve had a similar experience at Fogelman. Rent collections have outperformed expectations during the early part of the pandemic; however, we recognize that many are still struggling financially, which might impact future collections.

It’s difficult to predict what delinquency will look like in 2021 since it’s dependent on employment recovery and what stimulus is available to help struggling renters pay their rent. Along with the rest of the industry, we’ll be monitoring economic conditions as we head into the new year.

4. Getting Creative with Resident Connection

Striking the balance between resident interaction and safety precautions will continue to be a challenge for multifamily teams in 2021. Residents may want to resume “normal” social connection and activities with the coming winter months, but the ongoing pandemic will challenge property management teams to rethink social events and connectivity. Though we’ve seen a lot of virtual happy hours, drive-by celebrations, and Zoom classes, it’s the teams that leverage creative programming to bring people together online that will have the most success in 2021. For safe, socially distanced resident activities next year, we expect to see more virtual scavenger hunts and trivia, virtual cooking and mixology classes, and community visits from local favorite food trucks.

5. Adapting to the Evolving Needs of Residents

We understand residents are using their living spaces differently in the wake of increased remote working. Apartment units have become a place of work and leisure, and there are no signs of that changing anytime soon. Some major companies, such as Google, Target, Salesforce, and Facebook, are delaying the return to a traditional office environment until summer 2021, and a handful of companies, like Microsoft and Twitter, are transitioning to a permanent remote status.

In 2021, management companies will need to continue adjusting their offerings to meet resident needs in the short and long term. Whether that’s providing better high-speed internet packages, creating socially distant co-working spaces, offering reservation-based conference rooms, or establishing wellness-focused areas like outdoor green spaces and trails. Those that adapt the fastest and implement feedback from their residents will be most successful in strengthening resident retention and satisfaction.

6. Go Digital, Stay Connected

Because of the pandemic, we’ll continue to see less physical interaction with residents, causing a greater demand for information and the frequency at which it’s delivered across online platforms. As mentioned earlier, digital communication tools like apps, emails, and texts are the industry standard and mainstay for properties in 2021. Another must-have for convenience is a web portal that allows residents to make payments, submit maintenance requests, and view discussion boards or upcoming events. For prospects, offering self-guided and virtual property tours will be an important, safer option. Overall success in 2021 requires that digital tools provide both convenience and ease of fast, frequent communication to help us meet our residents and potential residents right where they are—online.

Tech Companies Moving to Texas Fuel State’s Apartment Boom

In the last few months, several major California technology companies have announced plans to move to Texas—an exodus that will further fuel the Lone Star state’s ongoing  apartment construction boom. There are already currently 126,900 apartments under construction in Texas, making the state the national leader for new apartment construction, according to RENTCafe.

Nor is this influx likely to through the state’s supply-demand balance out of whack. “Texas holds the indisputable advantage of land use,” says Doug Ressler, manager of business intelligence at Yardi Matrix. “What’s great about it is that it enjoys an adequate availability to support population growth and migration, from dense cores to available exurban or suburban areas.”

Dallas is leading the state in new apartment construction with 49,000 new units under construction. In the last decade, more than 177,000 new units have been built in the market. Austin comes in second with 31,000 apartment units in the current construction pipeline and 22,600 of those units are located in Austin proper.

It isn’t surprising that these two markets, which account for more than half of the total apartment construction in the state, are also the primary locations for tech companies. Oracle and Tesla are both planning to move their California headquarters to Austin. Tesla alone says that it will create 5,000 new jobs and occupy 4 million to 5 million square feet of office space in the market. Oracle opened its Austin office campus in 2018, and the property supports 10,000 employees. Both companies have noted the business-friendly state and a large pool of tech workers as the reason for the move.

Hewlett Packard Enterprise Co. is also moving to the Lone Star state, but the firm is relocating to Houston, where it is building a new campus. Houston rivals Austin in terms of new apartment construction, with 28,600 new units in the pipeline, and more than 17,000 are landing in Houston proper. The city has been named the most popular market for corporate relocation and expansion.

San Antonio rounds out the list for apartment construction in the state with 10,900 new units in the pipeline.

Apartment construction has been robust in Texas for the last decade, with more than 500,000 new units in 2,000 new apartment buildings delivered in that time. Dallas has led the apartment construction activity with 177,400 new units added in the last 10 years, followed by Houston, which has seen 131,000 new apartment units come to market.

The apartment boom has also helped fuel growth in surrounding metros. Suburban Texas markets have grown in popularity among renters, many of which are offering many urban-style amenities found in the urban core, without the price tag and congestion. Texas has eight cities on RentCafe’s list of the top 20 suburbs in the US.

Understanding Prepayment Penalties

Mortgage loans are expensive to originate.  It is not uncommon for consumer mortgages to cost upwards of $9,000.  Lenders typically recoup those costs through a combination of upfront fees and interest revenue over the life of the loan. 

If a borrower pays off a loan shortly after origination, the lender is at risk of losing money on the loan. Enter prepayment penalties.  A prepayment penalty is a contractual clause that states the borrower is going to pay the lender an additional fee if the borrower pays the loan off early.  This really isn’t a penalty at all.  It is a way for the lender to make sure they don’t lose money on a loan.

For example a standard prepayment penalties with a 5 year structure of 5/4/3/2/1 structure. This means that if the borrower pays off the loan in year one, they have a 5% prepayment penalty, in year two, a 4% prepayment penalty, in year three, a 3% prepayment penalty, and so forth. So, you might be wondering how this affects the borrower, and the answer is, it depends on your investment strategy. Let’s dive in.

The rental investors looking to grow a legacy of rental properties and hold on to them long term (we call these properties “permanent rentals”) are not really affected by the prepayment penalty.  Since their investment strategy focuses on the lifetime of the loan, paying off the loan in the first five years is a moot point.

On the other hand, investors looking to purchase rental properties with flexibility to sell in the foreseeable future (we call these properties “transitional rentals”) are very concerned about the prepayment penalty. These investors are interested in market conditions and want to be able to sell the property at the right time without worrying about paying a penalty fee.

What is Rent to Income Ratio and How to Calculate It, Winston Rowe and Associates

The Importance of Rent to Income Ratio

A rent to income ratio determines the monthly or annual gross income a tenant must earn to be able to afford rent each month. This ratio is a useful and simple tool that helps tenants as well as landlords enter into a smooth rental agreement.

Using an income to rent calculator, landlords can analyze the ability of tenants to pay rent each month. As a result, it simplifies the process of tenant screening and shortlisting applicants.

Calculating Rent to Income Ratio

Here are two commonly used ways to calculate this ratio:

Calculate net income against a fixed rent percentage

This will help you determine the maximum amount you can afford to pay in rent each month. The industry standard is 30% of your income. In other words, no more than 30% of your annual income should go toward housing costs.

Its mathematical representation looks like this:

(Net earnings per year / 12) X 0.3 = Maximum monthly rental income

For example, suppose an applicant earns $150,000 per year. The income to rent ratio will be:

(150,000/12) X 0.3 = $3,750

Now, if the rental site asks for $4,000 per month, the applicant would fail to meet this condition. This is because their maximum monthly rental income does not reach the required limit. Therefore, the landlord might not find the candidate eligible for renting.

Use a ratio multiplier

Another method to calculate the rent to income ratio is to multiply the monthly rent value with a ratio multiplier. In this method, the standard multiplier is 3. This means that the applicant should make at least three times their gross monthly income to cover rental expenses. The math would look like this:

Monthly Rent X 3 = Minimum monthly rental income

Let’s consider an example to better understand. Suppose you are interested in renting an apartment that asks for $3,000 per month. Three times this rent amount becomes $9,000. This means you must gross a minimum of $9,000 per month in income to be eligible for consideration.

Pros & Cons of Rent to Income Calculations

Each month, a tenant’s paycheck likely goes toward many different bills and obligations. By gaining an understanding on how much monthly income is remaining, you’ll get a better idea of the ability to pay.

When landlords are recruiting good tenants, the rent to income ratio plays a very important role. It is the primary way to determine income requirements to rent properties based on monthly or annual earnings. This helps ensure that the tenant is able to afford rent each month.

As a landlord, you might not want to invest your time on ineligible tenants for your property. Calculating the gross income to rent ratio is an important step toward securing the right people for your rentals. Rather than going through the hassle of the screening process, use the rent-to-income ratio as your simple criteria instead.

However, ideal rent to salary ratio situations are not always as favorable as they sound. We know a lot of people aren’t that consistent in paying rents. Whereas, applicants who may not satisfy the income to rent ratio could be more responsible when it comes to paying rent on time.

Plus, some complexes make their income to rent apartment policies 3:1 . This might look like a lucrative option but in actuality, it prompts to a significant decline. Some tenants demonstrate a consistent ability to pay rent while others, with higher rent to income ratio, fail to provide steady deposits.

On the other hand, the 30% rule is a popular guideline for determining what percentage of income should go to rent. However, there are two big flaws associated with this rule. First, it doesn’t account for inflation and rising rental prices. Although rent prices are climbing more rapidly in some areas than others, average wage growth has been relatively flat since 2007. So, while rental rates are climbing, incomes aren’t necessarily keeping pace.

The second problem with the 30% rule is that it’s not personalized to your situation. It doesn’t take into account, for instance, how much student loan or credit card debt you might be paying off. Moreover, it also does not consider how much money you’re earning, your financial goals, or the condition of the real estate market where you are planning to rent.

Alternative ways to calculate rent to income ratio

As a rule of thumb, your income should be 40 times your rent, which is basically the same as 30% of your total salary. Almost every rent to income ratio calculator you find online uses this alternative way to calculate the ratio.

For example, suppose your income is $100,000 per year, the amount of rent you can afford each month can easily be evaluated as 30% of your total income divided by 12.

The math will look like this:

(0.3 * 100,000) / 12 = $2,500

Alternatively, you can divide the net amount by simply 40.

( 100,000 / 40) = $2,500

How Landlords Can Protect Themselves?

Calculating rent to income ratio might seem quite effortless and manageable, but it might partly hold a deficit for the landlord. Why? Because the landlord is not able to acknowledge the total worth of the tenant because of unspecified sources of income. The potential tenant may seem to have other financial obligations like loan percentage, fixed rate for insurance, and indemnification.

Even after thorough screening, some people may delude and provide false income documentation. In any case mentioned above, the landlord is fully granted the right to access all additional financial information of an applicant. Tenants should likely provide all credit card details with a proper financial report.

Before letting in a tenant, make sure that all the certified funds, cashiers’ checks, money orders, and records of all previous taxes of a year are officially provided. Even if your tenant qualifies as per the 30% rule, they may be overburdened with extra expenditures. In such cases, landlords need to assure ways to protect themselves.

Here’s how landlords can protect themselves:

Set up recurring rent payments

Auto-pay services provide a convenient method of direct deposit with rent deduction on a specified date. It also provides more assurance of getting paid on-time each month if payments are set up to recur.

Request a large deposit as a backup provision from any uncertainty or loss

A larger security deposit offers greater security because it can cover the landlord’s losses in case of damages or missed rent. Also, introduce several methods of rent payment. Get rent default insurance coverage to keep your income stable and regular.

Specify a co-signer on the lease

The co-signer is responsible to pay the dues in case the primary leaseholder cannot. The landlord should vet the co-signer as thoroughly as the tenant.

Run a thorough background check

Check the tenant’s background and inquire about past rental history. Also, check what your tenant presents as evidence. Cross-check all the references provided. Verify and validate all means of income sources. Gather data regarding any individual or collective payments or transactions. Once the property is rented, conduct routine inspections to prevent huge problems.

Rent to income ratio can benefit the landlord and tenant in many ways. It can help with budget planning for tenants looking to comfortably afford their rent. Whereas, it can prevent landlords from having tenants who may have difficulties paying their rent.

However, when it comes to screening and shortlisting a tenant, the rent to income ratio may not reveal enough about the tenant, their level of responsibility, or honesty. Therefore, all landlords should be running tenant credit checks, in addition to, calculating rent to income ratios.

The Ins and Outs of Apartment Building Construction

Apartment Construction Lending No Upfront Fees Winston Rowe and Associates

In nearly every metro area of the country, building developers and contractors are scrambling to keep up with the growing demand for rental apartments. In 2014, nearly 350,000 apartments began construction. A number that increased by nearly 14% from 2013, according to the National Association of Home Builders.

However, even with a large number of projects underway, there are certainly no shortages of challenges that come with apartment construction and there are a number of variables to take factor in when considering the overall cost of commercial apartment construction.

From what type of amenities you will include with the building to the building’s walkability in the surrounding area and construction variables such as labor, weather, trade tariffs, it can be a challenge to construct the building of your dreams while staying within budget.

As apartment sizes are shrinking, tenants are turning to the amenities to help meet all of their needs while living there and driven property owners to great lengths to include must-have amenities for everyone. But when it comes to designing an amenities package and choosing what amenities to include there can often be a lot of “push and pull.” It is a careful space-planning exercise.

According to a 2015 survey from the National Multifamily Housing Council, amenities such as fitness areas, pools, and in-unit laundry machines were of greater interest to Millennials than to baby boomers and nearly 60% of the 120,000 person survey said they are interested in having a lounge area or party room in their apartment building.

For owners and developers, it is important to know which amenities will give the most return on investment. When designing a new apartment construction project, it pays to stay up on the trends of potential tenants.

Some amenities require not only an allocation of space, but significant ongoing maintenance and expenses while others can be installed at little initial or ongoing cost. Some can even save you money over time. The type of amenities you should include will come down to which amenities are valued most by renters, as well as age group and lifestyle.

Location and Walkability

Determining what amenities are right for any one community can be a challenge, but some amenities can be scaled back if the apartment exists within a surrounding community.

For some renters, location is the number one amenity. In a 2015 nationwide survey by the National Association of Realtors, roughly eight out of 10 people said that being in walking distance to community features like shops and parks was very important to them when considering a new place to live. Tenants care about the walkability of their living situation. If tenants live within walking distance of restaurants, bars, and gyms then forgoing some of those features can save on apartment construction cost.

However, apartment construction in a walkable city can be a challenge because there is limited space. Not only that, but land costs are also much higher for walkable, urban locations as opposed to rural areas. As a building developer, you will want to find ways to work with a municipality to provide useable sidewalks, trails, and open spaces to attract new renters and encourage a pedestrian-friendly experience for everyone.

Amenities and walkable communities aren’t the only things developers and contractors struggle with when it comes to apartment construction as there are a variety of other factors that can affect the final price.

Many apartment developers are fighting off price increases for things like labor shortage, weather conditions, and building materials due to international trade tariffs. In fact, according to data from the Bureau of Labor Statistics (BLS), even the threat of trade tariffs can affect the price of steel and lumber. In August of 2018, the producer price index for steel mill products jumped by 19 percent compared to the year before and while lumber and plywood also saw a sharp rise in the spring and early summer.

If you are planning to build an apartment building or are a current property owner looking to make upgrades, click below to contact us today!

Winston Rowe and Associates Construction Lending

Commercial Construction Loans: The Ultimate Guide

No Upfront Fee Commercial Construction Loans

Winston Rowe & Associates

You’ve reached the point in your business when it’s time to expand. Maybe you’re renting your office space and you’ve decided that it’s time to build your own office building.

Perhaps you’ve outgrown your property and you want to add on to your existing space. Your scenario could be completely different: you’re a new business just getting off the ground and you want to build your property from the ground up.

No matter what the circumstances, many businesses face a situation where real estate construction or improvements are the next steps for business expansion. Of course, this expansion comes at a very high cost – a cost that many businesses can’t afford to pay up front. This is when it’s time to consider taking out a commercial construction loan.

As with any other type of financing, it’s important to understand the mechanics behind a commercial construction loan.

Read on to learn more about commercial loans, when you should consider applying, and what to expect throughout the application process.

What Is A Commercial Construction Loan?

A commercial construction loan is a type of loan that is used to finance the costs associated with the construction or renovation of a commercial building. The funds from a construction loan can be used to pay for labor and materials for the construction of a new property, the purchase and development of land for a new commercial property, or the renovations of existing properties.

Why Take Out A Commercial Construction Loan?

Business owners who plan to purchase existing commercial properties can get a loan known as a commercial mortgage. However, if you plan to renovate your existing space or construct a new building from the ground up, you’ll need to apply for a commercial construction loan.

New construction and renovations can be expensive — think hundreds of thousands or even millions of dollars. Most growing businesses don’t have this type of cash on hand, so instead, they turn to a commercial construction loan. With commercial construction loans, lenders provide funds throughout the construction process to pay for labor, materials, and land development so you don’t have to cover the costs yourself.

How do you finance a large construction project?

Commercial construction loans are different from other loans. Most loans are structured so that the borrower receives the full amount of the loan as one lump sum. Once the loan is received, the borrower begins to pay back the loan through scheduled payments over a set period of time. Commercial mortgages, for example, often have a monthly repayment schedule over 10 years or longer.

With commercial construction loans, the full amount of the loan is not received up front. Instead, the borrower will work with the lender to create a draw schedule. This means that partial amounts of the loan will be released as the project hits new milestones. For example, the first draw will be for the clearing and development of land. The next draw may then occur when the foundation is poured. Another draw will be released when the building has been framed, and so on.

As each milestone is completed, a lender will typically require an inspector to confirm that the work is completed before releasing the next draw. This will continue until all milestones have been completed and the full amount of the loan has been distributed.

With a commercial construction loan, you will only pay interest on the portion of the loan proceeds that have been received. If the total cost of your new construction is $500,000 but the lender has released just $100,000, you will pay interest on $100,000.

Typically, a commercial construction loan is structured so that the borrower pays only the interest until the loan has been fully disbursed. Borrowers can then pay off the principle in one lump sum at the end of the construction project.

But once the project is done and the full amount of the loan is due, what does a borrower do next? Instead of having to make one large payment, the borrower now can receive a commercial mortgage. The property will serve as collateral, and the borrower will use the funds from the commercial mortgage to pay back the commercial construction loan. With the new mortgage, the lender will now be locked into more affordable monthly payments over a longer period of time.

Other commercial construction loans like the Small Business Administration CDC/504 loan provides more long-term options so an additional loan following the completion of the project will not be needed.

What is the current rate for commercial construction loans?

For commercial construction loans, borrowers should expect to pay interest rates between 4% and 12%. Borrowers with the best credit scores will receive the lowest interest rates. The type of lender you work with is also a factor. A commercial construction loan from a bank will typically have the lowest interest rate, while hard money lenders charge more interest for their loans.

Fees

There are several fees that may be associated with taking out a commercial construction loan. The fee types and amounts vary by lender. Some fees you may have to pay for this type of loan include:

Guarantee Fees

Processing Fees

Documentation Fees

Project review Fees

Fund control Fees

Down Payment

Because a commercial construction loan is a high-risk loan, a down payment is required. By paying a down payment, the borrower takes some of the risk off of the lender. Typically, down payment requirements are 10% to 30% of the total project cost. Rarely will a lender fund 100% of the costs of a commercial construction project.

Conventional lenders use a calculation known as loan-to-cost for commercial construction loans. The loan-to-cost ratio is calculated by dividing the total amount of the loan requested by the total project cost. Let’s say, for example, a business is requesting a loan of $190,000 for a project with a total cost of $200,000. The loan-to-cost in this example would be 95%.

Though requirements vary by lender, most require a loan-to-cost of 80% to 85%. For the example above, the lender would loan $160,000 at 80% and $170,000 at 85%.

If this occurs, what does the borrower do? While they may be forced to come up with the remaining costs out-of-pocket, there is another option — mezzanine loans — which we’ll discuss a little later.

Borrower Requirements: How Commercial Lenders Evaluate Eligibility

Not all construction projects are eligible for a commercial construction loan. There are several factors that a lender will consider in order to determine eligibility.

One of the first things that a lender will look at is your credit score. Because these are high-risk loans, lenders want to work with low-risk borrowers with high credit scores. Though credit requirements vary by lender, you should have a credit score at least in the high 600s before applying to qualify for loans such as the SBA CDC/504 loan. Other lenders may require a minimum score in the 700s. Business credit scores will also be evaluated.

The lender will also consider your debt-to-income ratio, also known as DTI. This ratio shows the relationship between the income and the debt of your business on a monthly basis. Typically, lenders look for a debt to income ratio of 43% or less, although some lenders may have stricter requirements. The lower your DTI, the higher your chances for approval. To calculate your DTI, use the following formula:

Total Monthly Debt Payments / Gross Monthly Income = DTI

Lenders will also consider your debt service coverage ratio, or DSCR. This shows the relationship between the income and debt of your business on an annual basis. To calculate for yourself, use the following formula:

Net Operating Income / Current Annual Debt Obligations = DSCR

The DSCR is a bit different from DTI because you want this number to be higher. This shows that your business is bringing in enough income to cover new debts. Most lenders look for a DSCR of 1.25 or higher, but again, requirements vary by lender. Learn more about calculating your DSCR.

The lender will also look at your industry experience and your current business financials to determine if you qualify for a loan. You’ll need to submit detailed construction plans for approval before a loan can be issued. In some cases, the plans may need to be altered based on any risks spotted by the lender, so your ability to be flexible in your plans is key.

Types Of Commercial Construction Loans

Now that you know more about the commercial construction loan process, it’s time to explore the different types of loans available.

SBA CDC/504 Loan Program

The Small Business Administration (SBA) CDC/504 loan is one of the most popular commercial construction loans. This is because these loans come with low down payments, competitive interest rates, and credit score requirements in the high 600s.

Borrowing Amount

No maximum, but the SBA will only fund up to $5 million

Term Lengths

10 or 20 years

Interest Rates

Fixed rate based on US Treasury rates

Borrowing Fees

CDC servicing fee, CSA fee, guarantee fee, third party fees (however, most of these fees are rolled into the interest rate or cost of the loan)

Possible prepayment penalty

Personal Guarantee

Guarantee required from anybody who owns at least 20% of the business

Collateral

Collateral required; usually the real estate/equipment financed

Down Payment

10% – 30%

With this loan, an SBA-approved Certified Development Company will fund 40% of the costs to renovate existing facilities, build new facilities, or purchase/improve land. Up to $5 million is available for borrowers.

Another lender will need to provide 50% of the project costs, while the borrower will be responsible for the remaining 10%. In some cases, borrowers may be required to pay 20%. Repayment terms are available up to 20 years, and interest rates are based on the market rates of U.S. Treasury issues.

SBA 7(a) Loan Program

The SBA also has the 7(a) program, which can be used for the purchase or construction of commercial real estate.

Through this program, borrowers can receive up to $5 million with repayment terms up to 25 years. Interest rates are based on the prime rate plus a maximum of 2.75%. To qualify, borrowers should have a credit score in the high 600s and a down payment of 10% to 20%.

Here are the base rates and markups for a 7(a) loan from the SBA:

Loan Amount      Less Than Seven Years    More Than 7 Years

Up to $25,000

Base rate + 4.25%

Base rate + 4.75%

$25,000-$50,000

Base rate + 3.25%

Base rate + 3.75%

$50,000 or More

Base rate + 2.25%

Base rate + 2.75%

Bank Loans

A traditional commercial construction loan from a bank is another option for business owners. Rates, repayment terms, and down payment requirements vary. Generally, a minimum down payment of 10% is required, maximum repayment terms of 25 years are standard, and fixed and variable rates are available.

You can start your lender search by talking to your current financial institution about your financing needs. See our post on the best bank loans for small business if you’re interested in specific recommendations.

Mezzanine Loans

Earlier in this post, we discussed loan-to-cost ratios. When a loan-to-cost ratio is lower and the borrower needs to come up with additional money, a mezzanine loan may be an option. This type of loan is secured with stock. If the borrower defaults, the lender can convert to an equity stake. With a mezzanine loan, the borrower has more leverage and can achieve a loan-to-cost ratio of up to 95%.

Where To Find Commercial Construction Loans

You know about the types of loans available to you, so where do you find a lender? This all depends on the type of loan you’re seeking.

An SBA-approved intermediary lender (which includes banks, credit unions, and private lenders) distributes 7(a) loans. For CDC/504 loans, an SBA-approved non-profit CDC provides this funding, although you’ll also have to find another lender to finance 50% of your project costs.

Banks and credit unions provide many commercial construction loan options, including SBA loans, traditional loans, and mezzanine loans.

Finally, commercial construction loans can be obtained through hard money lenders. These are private money lenders that provide short-term funding options for commercial construction projects. While there are a few benefits to working with these lenders, including minimal upfront costs and faster funding, these loans typically come with higher interest rates and fees than options from other lenders.

What is the best place for a commercial construction loan?

Winston Rowe and Associates can find you a lender for your commercial construction loan, the next step is to begin the application process.

Contact them at processing@winstonrowe.com or call 248-246-2243.

During this process, the lender will evaluate your personal and business financials, your credit score, and other factors that will determine both whether you’re approved and what your interest rates and terms will be.

Because construction loans are considered high-risk, you will need to provide the lender with a detailed business plan. This should include an overview of what your business does, its financials to date, details about your current operations, and future projections.

You will also need to provide your lender with details about the project. This includes a complete plan with specs and designs. An expected project cost, including estimates for contractors, materials, and other expenses, must be provided with your application.

Personal and business financial documents will also need to be submitted during the application process. These include, but are not limited to, personal and business tax returns, profit and loss statements, balance sheets, bank statements, income statements, and debt schedules showing current debt obligations. Documentation requirements will vary by lender.

The lender will pull your credit score during the process. Remember, lenders are looking for scores in the high 600s. With some lenders, negative items such as bankruptcies, foreclosures, and past defaults on loans may automatically disqualify you from receiving a loan. For negative items on your credit report, an explanation to the lender may be required.

Because this is such a high-risk loan product, lenders will typically take at least a minimum of several weeks to go over your information. During this time, more documentation may be required or your lender may have questions, so make sure to make yourself available to expedite the process.

Once the lender underwrites and approves your loan, you’ll move into the closing process. This entails going over the loan agreement, which will include all dates and milestones throughout the process. Once all paperwork has been signed and the closing process is complete, you’ll be ready to begin the expansion of your business.

Final Thoughts

It’s always exciting to reach a point in your business when it’s time to expand, but getting the financing you need can be a challenge. If your future plans include constructing new facilities or upgrading your current building, getting a commercial construction loan doesn’t have to be stressful.

If you understand the types of loans and requirements and do some prep work ahead of time, you’ll be able to approach your lender with confidence and get through the lending process with ease.

Free Business And Real Estate Investing eBooks

Contact Winston Rowe and Associates

Welcome to Winston Rowe and Associates knowledge blog, scroll down to the right for posts about commercial real estate.

This is a list of free books about real estate investing, commercial real estate financing and business strategy.

We’re always on the lookout for great free books so bookmark this blog and check back for monthly updates.

These links are not affiliate marketing links, just publications that we feel may add value to people and businesses.

Commercial Real Estate Finance

The eBook Commercial Real Estate Finance, by Winston Rowe & Associates discusses the fundamentals of the different types of commercial property, the various options that are included with properties and the capabilities that you will have as a commercial property investor.

Real Estate Investing Articles

This is a link to 1226 real estate investing articles written by industry veteran’s.

25 Productivity Tips for Successful Business Owners

Productivity is critical to your success at work. Business owners, managers and executives all want to get the most from their employees. If you’re not performing as efficiently or effectively as others, your long-term job prospects could be in trouble.

Real Estate Investing: How to Find Cash Buyers and Motivated Sellers

“Real Estate Investing: How to Find Cash Buyers and Motivated Sellers” teaches real estate investors and those interested in learning to invest in real estate how to define and target ideal cash buyers and motivated sellers. The book covers absentee owners, rehab investors, Section 8 landlords, and other buyer types. Some of the marketing topics include mailing lists, postcards, both online and offline marketing strategies along with examples. Anyone who wants to wholesale a house or is curious about flipping houses should pick this book to get educated on cash buyers and motivated sellers for their real estate investing.

Real Estate – Breaking Bad How to Flip Decaying Real Estate Properties for Profit

Tired of working 9 to 5? You should think of making money with real estate! Yes, the effort is well worth it! You just have to ditch the misconceptions and embark with all the passion you have in store for this amazing trip of rehabbing old houses and giving them a new look and a new owner.  Your reward? A nice profit!

Real Estate Forms Portfolio

A FREE and ready-for-download eBook consisting of a comprehensive collection of real estate-related forms for real estate investors.

Real Estate Secrets Exposed

This FREE e-Book sheds some light on the often mysterious and sometimes daunting world of real estate.

Use 1031 Real Estate Exchanges to Create Multiple Streams of Income

Discover how to use 1031 tax-free exchanges, tenants in common interests, and zero cash flow properties to create new sources of income. Learn how to offer bundled services and attract new clients. This FREE, ready for download eBook is perfect for anyone involved in real estate, taxes, mortgages, insurance, or law.  Download it now!

Make Money Through Real Estate Renovations

Download this FREE eBook and learn how a successful investor makes thousands of dollars from real estate renovations. Download it now!

Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders

Download this FREE e-Book, and discover the new secrets of funding real estate deals in the post-bubble real estate market, where traditional lending sources are getting very difficult to obtain. Download it today!

Real Estate Investing Strategy for Rehabs

This eBook is about residential rehabbing and the multiple strategies that can be used to maximize profits in this current economic climate. My goal has always been to share knowledge with folks that are truly interested in rehabbing and view it as not only for monetary gain but also see is as an “art and science” like I do. Happy Rehabbing!!

How to Be A Super Property Investor

A FREE, step-by-step guide that will help you become a super real estate property investor. Learn all the basic and some advanced investing techniques that have generated millions for property investors. Ready for download now!

Financial Terms Dictionary – 100 Most Popular Financial Terms Explained

This practical financial dictionary helps you understand and comprehend more than 100 common financial terms. It was written with an emphasis to quickly grasp the context without using jargon. Every terms is explained in detail with 600 words or more and includes also examples. It is based on common usage as practiced by financial professionals.

The Prince by Niccolò Machiavelli

Niccolò di Bernardo dei Machiavelli was an Italian diplomat, politician, historian, philosopher, writer, playwright and poet of the Renaissance period. He has often been called the father of modern political philosophy and political science.

The Science of Getting Rich by W. D. Wattles

This book is pragmatical, not philosophical; a practical manual, not a treatise upon theories. It is intended for the men and women whose most pressing need is for money; who wish to get rich first, and philosophize afterward. It is for those who have, so far, found neither the time, the means, nor the opportunity to go deeply into the study of metaphysics, but who want results and who are willing to take the conclusions of science as a basis for action, without going into all the processes by which those conclusions were reached.

Sun Tzu Art of War

Written in the fifth century B.C., Suntzu and Wutzu still remain the most celebrated works on war in the literature of China. While the chariot has gone, and weapons have changed, these ancient masters have held their own, since they deal chiefly with the fundamental principles of war, with the influence of politics and human nature on military operations; and they show in a most striking way how unchanging these principles are.

Make Extra Money Flipping Houses While On Vacation by Jason Medley

Reveals his simple and proven systems to automate, delegate and outsource nearly every function of his business except cashing his checks. He shows the exact steps that has allowed him to go on multiple vacations with his family throughout the year while having his system continue to flip houses for him.

Achieving Wealth Through Real Estate: A Definitive Guide To Controlling Your Own Financial Destiny Through a Successful Real Estate Business

Have you ever thought about making money with real estate? In Achieving Wealth Through Real Estate: A Definitive Guide to Controlling Your Own Financial Destiny Through a Successful Real Estate Business, author and entrepreneur Kirill Bensonoff takes you through the process of starting your own real estate business step-by-step, featuring his expert tips and tricks.

Business Loans Uncovered

Knowing if you qualify is one of the most important things to know when applying  for a loan of any type. Blindly applying for a loan and being declined increases the chances of you being declined again and again because you not only lower your credit score each time you apply, multiple inquires also serves a red flag to other lenders and as a result lenders put you in a high risk category and charge higher interest rates in the event of an approval Includes: ​Traditional Lenders, Government Sources, The 7(a) loan guarantee program, SBA Low Doc loan program, SBA Express loan program, Factoring, Venture Capitalists, Angel Investors.

50 Simple Secrets To Be A Happy Real Estate Investor

Discover the secrets used by successful real estate investors to create happiness in their lives and businesses. Naturally create more happiness for yourself by implementing time-tested secrets to happiness used by other real estate professional and investors just like you. Start to experience more productivity, satisfaction, and success immediately.

50 Simple Secrets To Be A Happy Real Estate Investor

Discover the secrets used by successful real estate investors to create happiness in their lives and businesses. Naturally create more happiness for yourself by implementing time-tested secrets to happiness used by other real estate professional and investors just like you. Start to experience more productivity, satisfaction, and success immediately.

Marketing Strategies for Real Estate Photography

One of the biggest problems that real estate photographers have once they have set up their business as a legal entity, obtained all the right equipment and perfected their technique is obtaining new clients.

Clients and customers are the lifeblood of any business, but how do you obtain new clients after starting your business?

By developing and executing a strategic marketing plan tailored to your business.

This short guide has been written to help real estate photographers develop their marketing plan and assist with winning new business.

It includes a series of digital and direct marketing strategies along with useful tips and lessons the author has learned from his own experiences that can save you time and money when growing your business.

A marketing action plan template has been included to help photographers execute the strategies learned in this guide book.

Books by Dr William Edward Deming

William Edwards Deming (October 14, 1900 – December 20, 1993) was an American engineer, statistician, professor, author, lecturer, and management consultant.

Educated initially as an electrical engineer and later specializing in mathematical physics, he helped develop the sampling techniques still used by the U.S. Department of the Census and the Bureau of Labor Statistics.

In his book The New Economics for Industry, Government, and Education Deming championed the work of Walter Shewhart, including statistical process control, operational definitions, and what Deming called the “Shewhart Cycle, which had evolved into Plan-Do-Study-Act (PDSA). That was in response to the growing popularity of PDCA, which Deming viewed as tampering with the meaning of Shewhart’s original work.

Deming is best known for his work in Japan after WWII, particularly his work with the leaders of Japanese industry. That work began in July and August 1950, in Tokyo and at the Hakone Convention Center, when Deming delivered speeches on what he called “Statistical Product Quality Administration”.

Many in Japan credit Deming as one of the inspirations for what has become known as the Japanese post-war economic miracle of 1950 to 1960, when Japan rose from the ashes of war on the road to becoming the second-largest economy in the world through processes partially influenced by the ideas Deming taught

Types of Multifamily Financing: Rates, Terms & Qualifications

Multifamily financing is a mortgage used for the purchase or refinancing of smaller multifamily properties that have two to four units and large apartment buildings that have five or more units. Multifamily loans are a good tool for both first-time real estate investors and seasoned professionals. Rates are generally between 4.5 percent and 12 percent with terms up to 35 years.

If you’re looking for a permanent multifamily loan for rental units you can check out Visio Lending. They’re a national lender that can finance 2 – 4-unit buildings up to 80% LTV. Terms are 30 years with fixed or variable competitive rates. Apply online today and get pre-qualified in a few minutes.

4 Types of Multifamily Loans

Type of Multifamily Loans

Conventional Multifamily Mortgage

Investor who wants to purchase a 2-4-unit building in good condition and may already have a banking relationship with a traditional lender

Government Backed Multifamily Mortgage

Owner-occupant of a 2-4-unit property or large investor who wants to use an FHA multifamily loan to purchase a 5+ unit building

Portfolio Multifamily Loan

An investor who doesn’t meet the qualifications of a conventional mortgage or an investor who wants to finance multiple properties at once

Short Term Multifamily Loan

A fix-and-flip investor who wants to purchase a distressed property quickly

1. Conventional Mortgage for Multifamily Properties

Conventional mortgages for buying a multifamily home are permanent “conforming” loans offered by traditional banks and lending institutions. These mortgages have terms of 15 to 30 years and can finance multifamily properties between two and four units but can’t finance apartment buildings with five or more units. Conventional mortgages are conforming because they typically adhere to Fannie Mae’s required qualifications and maximum loan amounts. However, they aren’t backed by the federal government.

Conventional mortgages for multifamily homes are right for investors who want a long loan term. They’re right for investors who purchase a multifamily property that has already been rehabbed. They’re also right for investors who already have a banking relationship with a financial institution that offers multifamily loans.

The rates found on a conventional mortgage can be either fixed or variable. Fixed rates are fully amortized throughout the loan’s term while variable rates typically reset after a seven- to 10-year period. Variable interest rates are based on the six-month stated Intercontinental Exchange London

Where to Find a Conventional Mortgage for Multifamily Properties

You can use Winston Rowe and Associates to connect with multiple lenders and receive multiple offers at once. They can help you find the best rates, terms and fees on your conventional mortgage quickly.

2. Government-backed Multifamily Financing

Government-backed multifamily financing is multifamily loans sponsored by Fannie Mae and Freddie Mac as well as the Federal Housing Administration (FHA). There are more than five government-backed multifamily financing options, which can either finance properties with two to four units or properties with five or more units.

Government-backed multifamily loans are right for investors who want to live in one of the units and rent out the other units. Investors who only have a small down payment can also benefit from government-backed multifamily loans. They’re also right for larger investors who want to purchase a five or more-unit property with an FHA multifamily loan.

Fannie Mae and Freddie Mac also have multifamily financing loans that can finance properties with five or more units. These government-backed loans are often referred to as “small balance loans” or “multifamily loans.”

Both Fannie Mae and Freddie Mac multifamily loans have terms between five and 35 years. The time to approval and funding with these multifamily loans can be 60 to 90 days. For FHA-backed multifamily loans, the term can be as long as 35 years. Because there are more regulations and guidelines with FHA loans, the time to approval and funding is longer at 60 to 180 days.

Fannie Mae and Freddie Mac’s multifamily financing options together can fund the purchase of a multifamily property between two and five units or more. Just remember that the conforming loans can finance properties between two and four units while the nonconforming multifamily loans can finance properties of five or more units.

The Fannie Mae, Freddie Mac and FHA multifamily financing options are originated and offered by government-approved mortgage lenders. For example, the Commercial Real Estate Finance Company of America offers all government-backed multifamily loan options.

3. Portfolio Loan for Multifamily Properties

A portfolio loan for multifamily properties is a nonconforming loan used to purchase a multifamily property between two and five or more units. Portfolio loans for multifamily properties are permanent mortgages with terms between three and 30 years.

These types of multifamily loans are right for investors who need more flexible multifamily loan requirements. They’re also right for investors who want to finance multiple properties at once because they can finance four to 10 properties simultaneously.

Where to Find Portfolio Loans for Multifamily Financing

Remember that since portfolio loans are nonconforming loans, they’re offered by lenders of all shapes and sizes. Traditional banks, credit unions and savings and loans, as well as private lenders, can all offer portfolio loans.

Winston Rowe and Associates capital sources offer multifamily portfolio loans for rental properties with two to four units. The national lender can finance up to 80 percent LTV. Terms are 30 years with fixed or variable rates that are competitive. Apply online and pre-qualify in minutes.

4. Short-term Multifamily Financing

Short-term multifamily financing is a non-permanent multifamily loan option with terms that range from six to 36 months. These loans include both hard money loans and bridge loans with monthly payments that are usually interest-only.

Short-term multifamily financing loans are right for investors that want to season, renovate or increase the occupancy a multifamily property in order to meet the stricter requirements of a permanent multifamily loan. Furthermore, some investors use these non-permanent options to buy a property and wait until they meet the personal qualifications before refinancing.

The LTV ratio is based on a multifamily property’s current fair market value and is used to finance properties in good condition. The loan-to-cost (LTC) ratio, on the other hand, is based on the combined costs of purchasing and renovating a multifamily property and is used for properties in poor condition. This means that an investor should expect to cover 10 percent or more of a property’s purchase price or 25 percent or more of a property’s purchase price plus renovation costs.

Permanent Multifamily Financing Options

Permanent multifamily mortgages have repayment terms of five to 35 years and have a loan-to-value ratio (LTV) of up to 87 percent. Interest rates range between 4 percent to 6 percent and rates can be fixed or variable. Permanent multifamily mortgages are the most common type of multifamily financing and account for 93 percent of outstanding multifamily loans.

Although permanent loans are generally long term, there are some shorter options. For example, government agencies offer loans that have terms between five to 10 years.

These multi-family loans are right for:

Investors who intend to pay off a multifamily loan within 10 years

Investors who need lower payments at the start of the loan

Investors who want an adjustable rate loan

Investors who want to renovate a multifamily property during a five to 10-year period

On the other hand, long-term permanent multifamily loans have terms between 10 to 35 years. Monthly payments are typically amortized during the entire term. What’s more, interest rates are typically fixed.

Long-term permanent multifamily financing options are right for the following investors:

Investors looking to purchase a long-term multifamily property

Investors looking to refinance an existing multifamily property

Investors looking to cash out refinance an existing multifamily property

Temporary Multifamily Financing Options

Temporary (short-term) multifamily loans, such as hard money loans, are mortgages with terms between six and 36 months. Monthly payments are typically interest-only with fixed rates between 4 percent to 12 percent or more. Temporary multifamily financing options are used to purchase, renovate, season or sell a multifamily property before refinancing to a permanent mortgage at a later date.

Theses temporary multifamily loans are right for:

Investors who need to season a multifamily property

Investors who need to increase the occupancy rate of a multifamily property

Investors who may want to renovate a multifamily property

Investors who don’t meet the stricter qualifications of a permanent multifamily loan

Investors who need to compete with all-cash buyers

Overall, investors of multifamily properties should be willing to be active in the management of the property. They should have at least nine months cash reserves not only to cover monthly loan payments through vacancy periods but also to cover unforeseen repairs as needed.

What Qualifies as a Multifamily Home?

A multifamily property is generally a residential property with two to four separate units. This is how lenders define a multifamily property. However, the FHA considers a multifamily property one that has five or more units.

Multifamily loans are used by investors to finance multifamily properties between two and five or more units. These properties can include condos, town homes, duplexes, apartment buildings and more. However, there are many different multifamily financing options available and it’s important to understand the best ways to invest in real estate.

Tech Solutions Every Multifamily Investor Should Know

Remember the days where finding and closing on a real estate deal averaged month? We’re pleased those days are long gone. Technology supplies small and large multifamily investors with the tools to speed up the acquisition, management, and disposition processes.

Choosing the right tool could mean the difference between closing in days or weeks, tenant retention or high turnover, and a low or high net operating income. The following six multifamily technology providers can play an important part in maximizing your investment.

Find a Multifamily Investment Property: LoopNet.Com

Searching for a multifamily investment property? Try the comprehensive commercial property marketplace LoopNet. Search over 800,000 commercial listings, 1.6 million sales comps, and 25 million property records. Their search engine narrows result by multifamily properties for sale in your area, helping investors find apartment buildings, duplexes, triplexes, and other multifamily dwellings. LoopNet is available as a mobile search app. When you are ready to sell your multifamily property, return to LoopNet.

Gather Data Intelligence: redIQ

RedIQ combines data analytics and visualization tools to help multifamily investors better evaluate investment decisions. The platform reduces the time required in capturing rent roll and operating statements, standardizing the data, and analyzing the trends and outliers. Easily compare the property’s performance against comparable properties. RedIQ is designed to eliminate manual data entry and generate a faster turnaround for the multifamily industry.

Monitor Project Progress: Honest Buildings

A leader in project management and procurement, Honest Buildings helps multifamily owners and investors track a project’s budget and timeline to completion. Asset management and construction teams use the features to collaboratively track costs, compare bids, and analyze data for better decisions. Honest Buildings’ platform automates administrative actions while keeping all parties up-to-date on progress. Project data is accessible from any device, desktop or mobile.

Manage the Property: RealPage

RealPage is an expansive suite of integrated property management, asset optimization, investment management, resident services, and leasing solutions. Their tools automate billing processes and aim to boost net operating income across the board. The facilities app integrates with OneSite Leasing & Rents. Residents can request service 24/7. Resident Technology Services assists with establishing technology infrastructure like high-speed Internet access and Internet of Things (IoT) amenities.

RealPage’s Asset and Investment Management (AIM) services streamline all the functions necessary to manage your multifamily portfolio. Their scalable real estate investment accounting service simplifies capital transactions, financial statements, and measures profit center performance. The RealPage Portfolio Asset Management (PAM) marries data and metrics for better decision-making. Analyze financial operating data in easy-to-read dashboards. Understand a property’s performance and its trends. The PAM works with any property accounting system already in place.

Optimize Your Multifamily Portfolio: Rentlytics

Understanding property performance data once required a lot of labor and manpower to analyze multiple spreadsheets. Rentlytics simplifies how multifamily real estate investors and managers analyze property and portfolio data. All information on delinquency, financial history, budget variance, occupancy, and rents is compiled into an easy-to-understand dashboard. The automated process helps multifamily investors identify and predict trends.

Marketing Solutions: RentPath

RentPath simplifies digital marketing solutions, helping find the right renters for the right property. Their marketing network includes Apartment Guide, Rent.com, and Rentals.com. Marketing combination packages include listing the property on top rental websites, high definition photoshoots, reports and analytics, easy updates, and lead capture forms. Monitor prospect calls with call recording to screen applicants. Leverage certified resident ratings and reviews to boost your property’s reputation. Mobile-optimized websites are available, and additional features vary according to the RentPath marketing package.

4 Types of Multifamily Financing: Rates, Terms & Qualifications Winston Rowe and Associates

Multifamily financing is a mortgage used for the purchase or refinancing of smaller multifamily properties that have two to four units and large apartment buildings that have five or more units. Multifamily loans are a good tool for both first-time real estate investors and seasoned professionals. Rates are generally between 4.5 percent and 12 percent with terms up to 35 years.

1. Conventional Mortgage for Multifamily Properties

Conventional mortgages for buying a multifamily home are permanent “conforming” loans offered by traditional banks and lending institutions. These mortgages have terms of 15 to 30 years and can finance multifamily properties between two and four units but can’t finance apartment buildings with five or more units. Conventional mortgages are conforming because they typically adhere to Fannie Mae’s required qualifications and maximum loan amounts. However, they aren’t backed by the federal government.

Conventional mortgages for multifamily homes are right for investors who want a long loan term. They’re right for investors who purchase a multifamily property that has already been rehabbed. They’re also right for investors who already have a banking relationship with a financial institution that offers multifamily loans.

Multifamily Conventional Mortgage Loan Amounts

Conventional multifamily loan amount and down payment are:

Two-unit property: $533,800 to $800,755

Three-unit property: $645,300 to $967,950

Four-unit property: $801,950 to $1,202,925

LTV: Up to 80 percent

Down payment: 20 percent or more

Keep in mind that these maximum loan amounts are regional and higher cost areas like Hawaii have higher maximum loan limits. An investor’s typical down payment with a conventional multifamily loan is 20 percent or more of the property’s purchase price. This is fairly standard when compared to more traditional residential property loans.

Conventional multifamily mortgage costs are generally:

Rates: 4.5 percent to 6.5 percent

Loan origination fees: 0 percent to 3 percent

Closing costs: 2 percent to 5 percent

The rates found on a conventional mortgage can be either fixed or variable. Fixed rates are fully amortized throughout the loan’s term while variable rates typically reset after a seven- to 10-year period. Variable interest rates are based on the six-month stated Intercontinental Exchange London Interbank offered rate (LIBOR), and there is usually a cap equal to the starting interest rate plus 5 percent to 6 percent.

You might also be charged a minimum $500 appraisal fee as well as an application fee that’s typically around $100 to $200. The application fee will sometimes cover the appraisal. Loan origination fees and closing costs are typically taken directly out of the loan.

Conventional multifamily mortgage terms are generally:

Term: 15 to 30 years

Funding time: 30 to 45 days

Conventional Multifamily Mortgage Loan Requirements

Conventional multifamily loan qualifications are generally:

Units: 2 to 4

Credit score: 680 or more (check your credit score for free here)

DSCR: 1.25 or higher, which is the amount of cash flow available to cover debt payments

Cash reserves: 6 to 12 months

If you have a property with five or more units, you’ll want to look into government-backed multifamily loans and multifamily portfolio loans. Further, conventional mortgages typically don’t finance a rehab or renovation project. Therefore, the second qualification you need to mind is that all multifamily properties have to be in good condition prior to financing.

2. Government-backed Multifamily Financing

Government-backed multifamily financing is multifamily loans sponsored by Fannie Mae and Freddie Mac as well as the Federal Housing Administration (FHA). There are more than five government-backed multifamily financing options, which can either finance properties with two to four units or properties with five or more units.

Government-backed multifamily loans are right for investors who want to live in one of the units and rent out the other units. Investors who only have a small down payment can also benefit from government-backed multifamily loans. They’re also right for larger investors who want to purchase a five or more unit property with an FHA multifamily loan.

Government-backed loan amount and down payments are generally:

Two-unit property: $533,800 to $800,755

Three-unit property: $645,300 to $967,950

Four-unit property: $801,950 to $1,202,925

LTV: Up to 80 percent

Down payment: 3.5 percent or more

Government-backed loans have the following loan amounts:

Fannie Mae: $750,000 to $3 million or more

Freddie Mac: $1 million to $6 million or more

The FHA offers multifamily loans for properties with five or more units. The minimum loan amount is $1 million and there is no maximum amount. However, the FHA 223(f) apartment loan can finance up to 87 percent of a property’s LTV, meaning that the down payment would only be 13 percent or more of the purchase price.

Government-backed multifamily loan rates include:

Rate: 5 percent to 7 percent or higher

Loan origination fees: 0 percent to 1 percent

Closing costs: 2 percent to 5 percent

Prepayment penalty: 1 percent

These costs are usually taken directly out of the loan and aren’t considered out-of-pocket costs. Fannie Mae and Freddie Mac multifamily loans with longer terms have fixed rates that are fully amortized and shorter-term loans can have fixed or variable rates. FHA rates are fixed over the entire term. Fixed rates are typically amortized over the term of the loan while variable interest rates adjust after three to 10 years based on the current six-month LIBOR rate.

In contrast, FHA 223(f) loan costs are generally:

Loan origination fees: 0 percent to 3 percent

Closing costs: 2 percent to 5 percent

FHA inspection fee: 1 percent or more

Mortgage insurance premium: 1 percent

Legal fees: $10,000 or more

Government-backed Multifamily Financing Terms

The terms for government-backed multifamily loans are:

Term: 5 to 35 years

Funding time: 60 to 180 days

Both Fannie Mae and Freddie Mac multifamily loans have terms between five and 35 years. The time to approval and funding with these multifamily loans can be 60 to 90 days. For FHA-backed multifamily loans, the term can be as long as 35 years. Because there are more regulations and guidelines with FHA loans, the time to approval and funding is longer at 60 to 180 days.

Government-backed Multifamily Mortgage Loan Requirements

The qualifications for government-backed multifamily loans are:

Units: 2 or more

Credit score: 650 to 680 or higher (check your credit score for free here),

DSCR: 1.25 or higher, which is the amount of cash flow available to cover debt payments

Occupancy: 85 percent to 90 percent or more

Liquidity: At least 9 months

Occupancy: At least 3 months

FHA multifamily loan qualifications are:

Units: 5 or more

Credit score: 650 or higher (check your credit score for free here),

DSCR: 1.15 or higher

Occupancy: 95 percent or higher

Liquidity: At least 9 months

Occupancy: At least 6 months

Fannie Mae and Freddie Mac’s multifamily financing options together can fund the purchase of a multifamily property between two and five units or more. Just remember that the conforming loans can finance properties between two and four units while the nonconforming multifamily loans can finance properties of five or more units.

Where to Find Government-backed Multifamily Financing

The Fannie Mae, Freddie Mac and FHA multifamily financing options are originated and offered by government-approved mortgage lenders. For example, the Commercial Real Estate Finance Company of America offers all government-backed multifamily loan options.

3. Portfolio Loan for Multifamily Properties

A portfolio loan for multifamily properties is a nonconforming loan used to purchase a multifamily property between two and five or more units. Portfolio loans for multifamily properties are permanent mortgages with terms between three and 30 years.

These types of multifamily loans are right for investors who need more flexible multifamily loan requirements. They’re also right for investors who want to finance multiple properties at once because they can finance four to 10 properties simultaneously.

Multifamily portfolio loan amount and down payment are generally:

Minimum loan amount: $100,000 or more

Maximum loan amount: Depends on the lender

LTV: Up to 97 percent

Down payment: 3 percent or more

Portfolio loans for multifamily financing aren’t required to meet Fannie Mae or the other government organization’s requirements for maximum loan amounts and down payments. This means that portfolio loans are more flexible than conforming multifamily loans.

Portfolio multifamily loan rates are generally:

Rates: 5 to 6 percent or higher

Loan origination fees: 0 percent to 3 percent

Closing costs: 2 percent to five percent

Prepayment penalty: 1 percent

These costs are taken directly out of the loan and their interest rates can be either fixed or variable. Like the other multifamily loans, variable interest rates are typically fixed for five to 10 years before adjusting every six months based on the six-month LIBOR rate.

Terms for multifamily portfolio loans are generally:

Term: 3 to 30 years

Funding time: 30 to 45 days

The most common types of portfolio loans for multifamily financing will often have a term of 15 to 30 years. The usual time to approval and funding is between 30 to 45 days.

Portfolio multifamily loan qualifications are generally:

Units: 2 to 5 or more

Credit score: 600 or higher (check your credit score for free here),

DSCR: 1.25 or higher

Occupancy Rate: 90 percent or higher

Liquidity: 9 months or more

Occupancy: 3 months or more

4. Short-term Multifamily Financing

Short-term multifamily financing is a non-permanent multifamily loan option with terms that range from six to 36 months. These loans include both hard money loans and bridge loans with monthly payments that are usually interest-only.

Short-term multifamily financing loans are right for investors that want to season, renovate or increase the occupancy a multifamily property in order to meet the stricter requirements of a permanent multifamily loan. Furthermore, some investors use these non-permanent options to buy a property and wait until they meet the personal qualifications before refinancing.

Short-term multifamily loan amounts and down payments are generally:

Minimum loan amount: $100,000 percent

Maximum loan amount: Varies by lender

LTV: Up to 90 percent

LTC: Up to 75 percent

Down payment: 10 percent or more

The LTV ratio is based on a multifamily property’s current fair market value and is used to finance properties in good condition. The loan-to-cost (LTC) ratio, on the other hand, is based on the combined costs of purchasing and renovating a multifamily property and is used for properties in poor condition. This means that an investor should expect to cover 10 percent or more of a property’s purchase price or 25 percent or more of a property’s purchase price plus renovation costs.

Rates on short-term multifamily loans are generally:

Hard money loan rates: 7.5 to 12 percent or more

Bridge loan rates: 5 to 12 percent or more

Loan origination fees: 1 percent to 3 percent

Exit fee: 1 percent

Extension fee: 1 percent

Prepayment penalty: 1 percent

These costs are typically taken out of the loan and don’t come out-of-pocket. The interest rates found on short-term multifamily financing options vary widely depending on the type of loan and the lender.

Short term multifamily financing terms are typically:

Term: 6 to 36 months

Funding time: 10 to 45 days

The terms of a non-permanent multifamily financing option are short and typically between six to 36 months. This means that investors will typically either have to flip the property or refinance with a permanent multifamily loan at the end of the term.

However, the time to approval and funding is also short, making it advantageous for investors who need to compete with all-cash buyers. For hard money loans, the typical time to funding is between 10 to 15 days. For bridge loans, the time to funding is between 15 to 45 days.

The qualifications of short-term multifamily financing are generally:

Units: 2 to 5 or more

Credit score: 550 or higher (check your credit score for free here),

Experience: 2 or 3 past rehab projects or multifamily experience

Subordinated debt: None

Typically bridge loan qualifications are:

Units: 2 to 5 or more

Credit score: 640 or higher (check your credit score for free here),

Experience: 2 or 3 past rehab projects or multifamily experience

Subordinated debt: None

Interest reserve: Required for properties below 1.05 debt-service coverage ratio (DSCR)

Where to Find Short Term Multifamily Financing

Hard money lenders like Patch of Land offer 12- to 24-month short-term financing options for two- to four-unit buildings, condominiums, town homes and multifamily apartments. You can borrow up to 85 percent LTV with a max of $3 million. Interest rates start at 8 percent and their application can take minutes.

How Multifamily Financing Works

Multifamily mortgages can finance two types of properties. The first is a residential investment property with two to four units. The second is an apartment building with five or more units. This distinction between the types is important because the number of units dictates the types of multifamily financing options.

 

For example, conventional mortgages can only finance residential income properties between two to four units. Government-sponsored loans and short-term financing options, on the other hand, can finance both residential income properties as well as apartment buildings with five or more units.

Permanent Multifamily Financing Options

Permanent multifamily mortgages have repayment terms of five to 35 years and have a loan-to-value ratio (LTV) of up to 87 percent. Interest rates range between 4 percent to 6 percent and rates can be fixed or variable. Permanent multifamily mortgages are the most common type of multifamily financing and account for 93 percent of outstanding multifamily loans.

Although permanent loans are generally long term, there are some shorter options. For example, government agencies offer loans that have terms between five to 10 years.

These multi-family loans are right for:

Investors who intend to pay off a multifamily loan within 10 years

Investors who need lower payments at the start of the loan

Investors who want an adjustable rate loan

Investors who want to renovate a multifamily property during a five to 10 year period

On the other hand, long-term permanent multifamily loans have terms between 10 to 35 years. Monthly payments are typically amortized during the entire term. What’s more, interest rates are typically fixed.

Long-term permanent multifamily financing options are right for the following investors:

Temporary Multifamily Financing Options

Temporary (short-term) multifamily loans, such as hard money loans, are mortgages with terms between six and 36 months. Monthly payments are typically interest-only with fixed rates between 4 percent to 12 percent or more. Temporary multifamily financing options are used to purchase, renovate, season or sell a multifamily property before refinancing to a permanent mortgage at a later date.

Theses temporary multifamily loans are right for:

Investors who need to season a multifamily property

Investors who need to increase the occupancy rate of a multifamily property

Investors who may want to renovate a multifamily property

Investors who don’t meet the stricter qualifications of a permanent multifamily loan

Investors who need to compete with all-cash buyers

Overall, investors of multifamily properties should be willing to be active in the management of the property. They should have at least nine months cash reserves not only to cover monthly loan payments through vacancy periods but also to cover unforeseen repairs as needed.

 

Apartment Building Loans No Upfront Fees Winston Rowe & Associates

Real Estate Investing

Winston Rowe & Associates a national no upfront fee apartment loan and financing firm. With direct access to the most aggressive investor sources in the world, they can structure a customized financing solution for clients, with the best terms possible.

Winston Rowe & Associates Capital Deployment Objectives:

No upfront or advance fees
Loan amounts starting from $1,000,000 to $500,000,000
Private or hard money funds available for a quick close
Debt coverage ratios (DSCR) from 1.20 and up
All property types considered
Construction, Bridge, or Permanent Financing
Adjustable Loans, Fixed Loans, or Interest Only Loans
Loan to cost increased with mezzanine financing
Loan to value increased with mezzanine financing

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans. Recognizing that people and relationships drive this business, they are staffed with some of the industry’s most committed professionals.

How To Purchase An Apartment Complex

Buying an apartment complex is a long, sometimes complicated, process. It’s important for you to gather as much information as you can before you make the decision to buy. Applying for a mortgage to finance an apartment complex is not at all similar to applying for a home mortgage. Apartment complexes with four or more units are commercial properties, and loans for them have different underwriting rules.

Types of Properties:

Decide if you want to purchase a residential apartment complex of a mixed-use building. A mixed-use building has a combination of office and residential units, but at least 80% of the space has to be residential. The complex has to have a grade of C+ or higher. This means you can’t rent the units daily or weekly, and the units can’t be single-occupancy, as in a rooming house or motel.

Gather information about the building you would like to buy. You may not be able to get a loan if the building will require excessive maintenance, or if the complex has not had 90% occupancy for the three months immediately preceding your loan application.

Background:

Talk to local real estate agents. Get their advice about the location you have in mind. Inquire about the possibilities of future zoning changes or any public works projects that may impact an income producing property. If there are plans for a regional airport to be built a few miles away in the next few years, for example, you might find it difficult to rent out your residential units. Don’t assume that everything will remain static; look at the past history of the location and try to imagine any major changes that could be likely to take place in the future.

Professional Expertise:

Have the building inspected by a professional who has experience inspecting commercial buildings. Make sure the inspection covers every aspect; don’t settle for a standard inspection, which may not include trouble spots, such as a wet basement. Pay extra money if you have to for a thorough inspection that goes above and beyond what is required by mortgage lenders. If the inspection reveals serious flaws, don’t make an offer, or reduce your offer amount by the amount it would cost to make the necessary repairs.

Supporting Documentation:

Assemble the documents you will need for the loan application. Your real estate agent will be able to assist you in this. Most lenders require the following documents, but your lending institution may require more:

The ensuing is a list of supporting documents that are required to process and underwrite (due diligence) your commercial loan request. Additional documents will be required.

Financial Supporting Documents:

The last three (3) years corporate tax returns

The last three (3) years business tax returns

Name and address of corporate bank

Business Profit & Loss 3 Years, For Seller or Buyer

Most recent copy of business bank statement

Personal financial statement for all guarantors

Use of Proceeds In An Excel Format For Cash Out Refinance

Property Supporting Documents:

Schedule of tenants leases

Copies of Tenant Leases

Schedule of Units with Square Foot Per Unit

Schedule of improvements to be made with cost breakdown to subject property

Exterior Photos of Subject Property Photos of Parking Lot, Street view

Interior Photos of Subject Property

Most Recent Appraisal

Copy of the First Page of the Insurance Binder for Refinance

List of All Litigation Past and Present

Guarantor Supporting Documents:

4506 T executed

Tri merge credit report

Government issued photo ID copy – front and back

Personal Financial Statement

Articles of Incorporation

HUD FHA 223 Apartment Building Loans

For those seeking multi-family properties, HUD Federal Housing Administration (FHA) loans provide an easier way to finance this purchase with fewer qualifications and increased flexibility.

HUD approved lenders are able to assume a greater level of risk and provide borrowers with the most aggressive rates and terms in the market.

HUD 223(f) apartment loans are available for the acquisition or refinancing of 5+ unit multifamily properties and are a great financing option for borrowers looking for maximum leverage and longer fixed rates and terms.

The program is available for market rate rental housing or for properties accepting rental assistance, either tenant based or project based a 30 day minimum lease term required.

There are no income or rent restrictions under Section 223(f) unless otherwise required by a project based HAP contract or other regulatory agreement. HUD FHA 223(f) insured mortgages are non-recourse with no market – economic or population – restrictions.

The property must meet a minimum three-year stabilization requirement, with complete kitchens and baths and have been completed or substantially rehabilitated prior to the date of the mortgage application.

The loan may include repair costs not to exceed 15% of its value after repairs or no more than $6,500 per unit, except in high cost areas. Repairs may not include replacing more than one major building system such as plumbing or electric.

Cash out Refinances are allowed when 80% of value exceeds existing debt plus transaction costs, but only 50% of the net cash will be released at closing.

HUD FHA 223 (f) Multifamily Financing Guidelines:

Loan sizes above $1 million – no maximum

83.3% LTV for market rate apartments

87% LTV for project based rental assistance

Up to 35 year fixed rate terms

1.17 minimum DSCR

HUD insured mortgages are non-recourse

5+ residential unit properties, including, detached, semidetached, row, walkup, or elevator-type rental or cooperative housing.

All 50 states including the US Territories of Puerto Rico, U.S. Virgin Islands, and Guam

With a core focus on flexibility, Winston Rowe & Associates really wants to be able to find a way to help everyone who comes to them find a funding solution that meets their needs.

The best funding solutions occur when they combine data with consultation and common sense.

That’s why Winston Rowe & Associates actually wants to speak with clients, so they can truly understand your business and its distinct needs.

You can contact them at 248-246-2243 or visit them online at http://www.winstonrowe.com

Freddie Mac Rental Income Calculations Changed

Winston Rowe & Associates

The changes are primarily aimed at determining the stability of that income, especially when it is short term and does not involve a lease.  The changes apply to loans with settlement dates on or after February 9, 2018.

Commercial loans used to purchase or refinance the subject property, or a non-subject property, which was not owned in the prior calendar year requires considering net rental income only up to a limit of 30 percent of the total of that net rental income plus all other stable monthly income used to qualify the borrower.

The exception would be a borrower who has a documented history of investment property management experience of at least one year.

The change is to provide support to sustainable and successful homeownership by requiring a reasonable limitation upon the reliance on a newer type of income stream.

To use rental income in refinancing a 1- to 4-unit investment property, a 2-to 4-unit primary residence, or a non-subject investment property, the following conditions must be met.

Short term rental income from a source where a lease is not utilized must have a two-year history documented on IRS Schedule E and the property must have been used for the purposes of producing rental income for that period of time.

Long term rental income can be verified through either a current signed and executed lease with an original term of one year or through income reported on Schedule E.

Sellers may also determine that rental income is stable without a lease when it is evident the income is not short-term, based on the documentation provided.

Changes to rental income requirements reflect changes in the rental market such as short-term rental income and are intended to support the determination of stability, calculation of rental income, and a reasonable expectation that rental income will continue.

The Freddie Mac Bulletin (#2017-12) also includes technical changes to rental income calculations, clarifications of some self-employed income revisions made last year.

This article was prepared by Winston Rowe & Associates.

They are publishers of Free eBooks and provide financing for a wide variety of commercial real estate

You can contact them at 248-246-2243 or visit them online at http://www.winstonrowe.com

Apartment Building Refinance, Rehab or Acquisition

Apartment Building Investing Business Metrics

Investing in apartments can be overwhelming.

Developing a financing proposal for a potential capital source, you’ll need to focus on the following.

Business Performance Metrics:

Net Operating Income (NOI)

Net Operating Income is the one metric that most investors use to analyze a property.  Unfortunately, it’s also the one metric that is the most manipulated by real estate agents to get someone to buy a property.

This is why it’s important for you to do your own math.  Here’s the formula for NOI:

Potential Rental Income

-Vacancy

Effective Rental Income

+Other Income
_____________

Gross Operating Income

-Operating Expenses
_____________
= Net Operating Income

Unlike other cash-flow metrics, NOI excludes financing and tax costs.  Therefore, investors are able to determine the cash-flow of a specific property.

Invest for the sake of cash flow, rather than making projections about potential appreciation (market or forced). As long as you follow that simple principle, you’ll be protected from a lot of risk.

Occupancy

The occupancy rate is the number of units filled divided by the total number of units.  For instance, if there are 95 units occupied out of a 100-unit apartment complex the occupancy rate is 95%.

Vacancy

Some investors prefer to use the vacancy rate instead of the occupancy rate. The vacancy factor is just the reciprocal of the vacancy. In the example above if there were 5 empty units out of a 100-unit apartment complex the vacancy factor would be 5%.

Absorption

This is an extremely important factor that you need to learn how to calculate – especially if you are investing in a growing market.  First, determine the total number of apartment units available in the market.

For this example let’s call it 3,000 with a 95% occupancy rate (2850 units rented).  Use a time-frame of 12 months.

Then find out how many units were built or demolished during this time frame.  For this example, let’s say a new apartment complex was built with 300 units so the market now is at 3,300 units with a 90% occupancy (2970 units rented).

In this example, even though the size of the market grew 10% to 3,300 units the absorption was extremely high because the total number of units rented actually increased.  Occupancy rate slipped slightly however, this is the sign of a healthy market.

Capital Expenditures (CapEx)

This is an easy metric to mess-up.  Basically, just think of capital expenditures as an expense.  However, capital expenditures improve the life of the asset.

A new roof would be an example of a capital expenditure.

Mowing the lawn would be an example of an expense.

A new roof improves the life of the asset you want to spread the cost of this new roof over the life of the asset.  For a roof, you would need to estimate the life of the roof.  Accountants call this “capitalizing the expense”

Reserves for Apartments

Reserves are a very big deal when investing in apartments.  When you forecast your return (especially your initial investment) you need to account for reserves.  Ok, what are actual reserves?  Well, there are multiple kinds of reserves such as:

Interest Reserves – That your lender might make you make. These payment reserves gives the lender a margin of safety knowing that there is always a certain amount of payments held in a reserve account, in-case you have some negative cash-flow for several months.

Cash Reserves – Investors, lenders, business partners or whoever else might be a stakeholder might want to require some cash reserves or liquidity reserves.  This simply ensures you will have the money to pay for any unforeseen expenses.

Maintenance Reserves – If you are buying an older property, maintenance reserves are absolutely essential. Instead of relying on cash-flow you will have properly reserved for any needed repairs and maintenance work.

With older properties, there is never a downside in having an excess maintenance reserve. You might lose out on some deals, but you will have an extra level of financial security.

Internal Rate of Return (IRR)

Of-course you want to measure your actual return for an investment. My favorite method is the IRR method. This extremely easy to do in excel:

Input initial investment

Forecast annual cash-flows

Forecast exit investment

Input total number of years

Loan-to-Value (LTV)

This metric is pretty simple; you simply take your loan balance divided by the value of the property. The vast majority of lenders have a loan to value maximum of 80%. One thing to note is that if there is a second mortgage that mortgage is sometimes lenders add that mortgage to their mortgage to get the total loan to value. The point of this ratio is to show that the investors have equity in the property.

Debt Service Coverage (DSC)

The formula for DSC is Net Operating Income divided by the total debt service.

Typically, lenders want to see at least a 1.10 DSC.  This means that for every $1.00 of debt service, the property is producing $1.10 of cash-flow to service that debt.

Capitalization Rates (Cap Rate)

When you hear of investors talking about a property for sale they normally talk about the cap rate the property is selling for.  The formula for cap rate is: Net Operating Income / Current Market Value

Even though this metric is simple, most real estate brokers manipulate this number (usually by using forecasted income numbers rather than the actual numbers).  Always take a stated cap-rate with a grain of salt and do your own math.

Apartment building financing is a Winston Rowe & Associates specialty.

Top Metro Markets to Rent to Millennials in 2015

Apartment Markets to Rent to Millennial’s

Investing in an apartment building can be a very profitable venture – if you find a building for the right price, with good potential cash flow and in a good investment location. If the location is not desirable, it won’t matter if you have the nicest building on the block or offer the most amenities for the lowest rents.

A couple of weeks ago RealtyTrac issued a report on the best markets for buying rental property in 2015 based on fair market rents for the year set by the U.S. Department of Housing and Urban Development and the most recent median home price data from RealtyTrac sales deed data.

The result was an interesting mix of counties at the top of the list: Baltimore City, Maryland (functions as a county) with a nearly 21 percent annual gross rental yield, followed by Richmond City, Virginia (also functions as a county) with a 20 percent annual gross rental yield.

Those two were followed by Philadelphia County, Wyandotte County, Kansas in the Kansas City metro area and Richmond County, Georgia in the Augusta metro area, all three of which had annual gross yields above 15 percent. Among these top five, the county with the biggest increase in millennials was Richmond City, Virginia, where the millennial population swelled 32 percent between 2007 and 2013.

50 Best Markets to Rent to Millennials

What, you may be wondering, about the traditional hipster hot spots like Washington, D.C., Brooklyn, San Francisco, Portland and Seattle? All of those did have significant increases in the millennial population between 2007 and 2013 ranging from an 82 percent increase in Arlington County, Virginia in the DC area to an 18 percent increase in Kings County, New York (Brooklyn). But the sky-high home prices in those markets means buying single family rentals in 2015 will not generate good rental returns.

Winston Rowe & Associates has strong relationships with a finite number of direct private capital, private equity, hedge funds, agency investors and regional and national commercial banks, each with a highly targeted commercial real estate financing practice.

When you call Winston Rowe & Associates, a principal is always available to speak with prospective clients. They can be contacted at 248-246-2243

They have no upfront fee apartment building financing in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Market Update 2015 Apartment Financing Matrix

Winston Rowe and Associates

Apartment owners with a minimum of 5 units will find a wide array of financing options to meet their individual financing needs including assorted fix rate hybrid loans and prepayment options. Purchase refinance and cash out refinance are also available.

The need for alternative sources of capital in the apartment and multifamily real estate industry has never been greater.

Winston Rowe & Associates is a capital source that provides flexible, reliable and timely solutions for owners of commercial real estate nationwide.

No Upfront Fee Apartment Loan Highlights:

Loan Amounts:

$250,000 – $10,000,000

Term & Amortization:

Adjustable, 3, 5, 7, and 10 year hybrid loans amortized out for 30 years.

Prepayment Penalty:

Typically step-down prepayment penalties during the fixed rate portion of the loan.

Loan to Value Ratio:

Maximum LTV 75% depending on the quality and program.

Debt Coverage Ratio:

Minimum 1.25:1 DCR

 

Apartment Building Boom Is Hitting A Ceiling After Five Years Of Increases – Winston Rowe and Associates

Winston Rowe and Associates

Apartment construction across the country has more than tripled since 2009. Last year developers started more than 350,000 multifamily housing units nationwide.
Analysts say that apartment construction increases should dwindle in the next two years. And a slowdown in Texas’ economy could play a part.

“My forecast is for a leveling — not a lot more growth,” said Dave Crowe, chief economist for the National Association of Home Builders, which is holding its annual meeting this week in Las Vegas. “We are at the level that can be sustained by the demand.”

Apartments accounted for about a third of total U.S. home construction in 2014.

In North Texas, the share was even higher. At the end of the year, more than 30,000 apartments were being built in the Dallas-Fort Worth area compared with about 26,000 single-family home starts in the area in 2014.

D-FW ranks fourth nationally for total apartment building permits.
Crowe said apartment construction is peaking because of construction constraints and a shift by some renters into home buying.house construction blueprint

“We are starting to see some of the older millennials moving to homeownership,” he said.

During recent years in most major cities, apartments have captured a larger than normal share of new households.
“Whatever the job growth has been, all of the newly formed households have become renters,” Crowe said.

He said that as renter’s age, they are more inclined to think about homeownership.

“They have expressed that as their ultimate desire,” Crowe said. “As they sustain some stability in their incomes and jobs, they will buy.”

‘Where we need to be’

Multifamily home starts rose by 16 percent in 2014 to about 352,000 units, based in large part on the large renter demand.

“I’m not expecting a significant amount of growth in 2015,” Crowe said. “We are where we need to be.”

Dallas-based apartment analyst Ron Witten with Witten Advisors thinks that the current apartment building boom around the country has peaked.

“We expect rental apartment starts to slow down slightly late this year, maybe off 5 percent from 2014,” Witten said.

“Fundamentals are still solid, but rising costs are shrinking development returns, which will make some proposed projects uneconomic.”

MPF Research is forecasting a slight drop in apartment building, too.

“We are calling for a slight pullback of 5 percent to 10 percent,” said Greg Willett, vice president with the Carrollton-based apartment consultant. “That really reflects expectations for Texas.

“We’re calling for a big drop in activity in Houston and mildly smaller start figures across D-FW, Austin and San Antonio,” Willett said. “Since Texas accounts for about 20 percent of the nation’s building in this development cycle, it would take big increases in late-recovery spots like Atlanta, Phoenix, Riverside and Las Vegas to completely counter less activity in the Texas markets.”

Projects on hold

While the drop in Dallas apartment building has more to do with higher construction and land costs, in Houston the dramatic fall in oil prices and layoffs by energy firms are reducing development.

Houston-based apartment architect Sanford Steinberg said he’s already seeing the impact of the energy sector pullback.

“Projects are being put on hold,” Steinberg said. “They are not killing the project but putting them on hold.

“In the last few years we have been going crazy building multifamily housing, not just in Houston but all over the country,” he said. “We could use a little slowdown right now.”

Crowe said that while construction is leveling, he’s still watching to see that developers don’t get too far ahead of tenant leasing.

“I worry about the multifamily sector overbuilding,” he said. “It’s the one residential sector that has the greatest access to credit.

“There is a history of builders building more because they can get credit than because they can fill up the units.”

Source: AAOA

Maximizing Apartment Building Investments – Winston Rowe and Associates

Winston Rowe and Associates

Winston Rowe & Associates, a national no upfront fee commercial real estate financier has prepared this news article to present strategies for apartment building owners to maximizing their investment.

Real estate investors, especially those that invest in residential apartment buildings or entire complexes, have a wide range of products and services at their disposal to help ensure they keep their units filled and properly maintained.

As we all know, each time an apartment turns-over it costs money in order to prepare the apartment for the next resident. It must be cleaned, often updates may be necessary, such as replacing counter tops, appliances, carpeting and tiles.

The better resident you can place and the longer they stay the more money you save. One of the main ways to maintain residents is to provide a wide range of amenities and keep the property well maintained. Not just the interior, but the exterior and the surrounding grounds like fountains, playgrounds, pools, gym-facilities and dog areas.

There are several products and services that can help building management find the right residents. Other than screening and conducting the proper credit procedures, having a company in place to take care of the maintenance is another key area of importance.

Hiring the right property management firm can be instrumental in helping apartment building owners keep their properties attractive to the right kind of renters and maintain the property inside and out in order to maintain the integrity of the asset.

Many property management companies offer a wide range of products and services that will keep a property well-maintained. They can create a schedule of services to make sure that all units get seasonal maintenance several times a year.

Winston Rowe & Associate has commercial real estate financing solutions for apartment building investors in the ensuing states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Apartment Fundamentals Still Strong

How to Get a Loan for an Apartment Building

Reis released its quarterly report on the U.S. apartment market on Tuesday, finding that the sector has cooled down somewhat recently. Vacancies, for instance, are at 4.2 percent as of Q4 2014, unchanged from the previous quarter and only down from 4.3 percent a year earlier. The apartment market isn’t remotely sluggish, but it isn’t the frenetic, ants-in-its-pants creature it became after the housing crash converted a lot of people into renters, or persuaded Gen Xers and Millennials that renting a few more years than their parents isn’t a bad thing.

In the longer run, even a breather such as this poses no threat to the market’s fundamentals. Reis senior economist Ryan Severino notes “demand had a surprising rebound during the fourth quarter to 45,027 units, the highest quarterly figure since the fourth quarter of 2013. This is an important point—even as construction increases in 2015 and beyond, demand will remain robust due to the large number of young renter in the US.” On the other hand, he says, even robust demand might not quite keep up with supply in future years, so “rising vacancy is likely to put downward pressure on NOI growth… even as rents continue to grow.”

And rents do continue to grow, Reis reports. In Q4 2014, asking rent was up 0.6 percent since Q3, and 3.5 percent since a year earlier. Likewise, effective rents were up 0.6 percent and 3.6 percent for the quarter and year, respectively. All in all, apartments are likely to remain a darling property type for landlords and investors for the foreseeable future.

Residential market: Not too hot, not too cold?

CoreLogic reported its latest Home Price Index on Tuesday, and it’s another in a litany of reports about the housing market that confirm a steady appreciation in prices, rather than the kind of huffing-and-puffing the U.S. experienced as the bubble heated up in the early to mid-2000s. The year-over-year increase in prices was 5.5 percent in November 2014, and barely anything month-over-month: 0.1 percent. Only a year ago, the annual appreciation was about twice as much.

There’s no way to know exactly how much appreciation is enough to keep the housing market on an even keel, but it’s clear that too much is bad (bubbles always pop) and not enough is also bad, since buyers lose confidence in a market that isn’t appreciating. That slows demand down which, in turn, depresses price appreciation further—a vicious cycle. As a main pillar of the American economy, and one that affects every kind of real estate, no one wants either an over- or under-heated residential market.

CoreLogic’s report is also important because it’s been showing for the last two years or so that the toxic effect of foreclosed housing (toxic, at least as far as residential prices goes, besides the human cost) isn’t nearly as pronounced as it was during the worst of the Great Recession. Excluding distressed sales in November 2014, home prices increased 5.3 percent from November 2013 and were up 0.3 percent from the prior month: not a huge difference.

The report also shows that some markets have recovered better than others. Including distressed sales, Michigan led the country with a 9 percent price increase from November 2013, followed by Colorado with an 8.8 percent increase. Excluding distressed sales, Massachusetts (up 8.6 percent) and Texas (up 7.9 percent) showed the largest increases.

CMBS delinquencies edge down

Trepp reported on Tuesday that the delinquency rate for US commercial real estate loans in CMBS is now 5.75 percent, down from 7.43 percent in December 2013, and its lowest level in five years. Over $700 million in loans were cured in December, which helped push delinquencies down by 14 basis points for the month. Among the major property types, the lodging sector saw the biggest year-over-year improvement, falling 314 basis points during 2014.

Wall Street took another tumble on Tuesday: a correction after an inflated 2014? Worries that the price of oil is going too low? In any case, the Dow Jones Industrial Average lost 130.01 points, or 0.74 percent, while the S&P 500 declined 0.89 percent and the Nasdaq was off 1.29 percent.

This article original appeared on MSNonline.com

National Apartment Loan Rates Winston Rowe & Associates

National Apartment Loan Rates

Winston Rowe & Associates is a no upfront fee commercial real estate capital source offering a wide variety of financing options for multifamily financing nationwide.

They have access to various financial institutions’ wholesale programs; offering clients the most competitive interest rates with no up-front fees and reduced financing costs.

Apartment owners with a minimum of 5 units will find a wide array of financing options to meet their individual financing needs including assorted fix rate hybrid loans and prepayment options.

Purchase refinance and cash out refinance are also available.

Eligible Properties:

Stabilized properties with at least 5 units in major MSA’s and proven management.

Up to 40% commercial component permitted; student and senior housing eligible for financing.

Loan Amounts:

$250,000 – $10,000,000

Term & Amortization:

Adjustable, 3, 5, 7, and 10 year hybrid loans amortized out for 30 years.

Prepayment Penalty:

Typically step-down prepayment penalties during the fixed rate portion of the loan.

Loan to Value Ratio:

Maximum LTV 75% depending on the quality and program.

Debt Coverage Ratio:

Minimum 1.25:1 DCR

Credit Score:

Minimum middle credit score 680

The goal at Winston Rowe & Associates is to add value to client’s acquisition or refinance by offering a wide range of financing solutions and direct access to top national, regional, and local retail banks, hedge funds and private capital lenders.

They can be contacted at 248-246-2243 or check them out online at

Winston Rowe & Associates provides Apartment Building financing in the ensuing states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

National Apartment Loan Rates No Upfront Fees

Multifamily Best Loan Rates

Winston Rowe & Associates is a no upfront fee commercial real estate capital source offering a wide variety of financing options for multifamily financing nationwide. Not only can they save you time by searching hundreds of loan programs for you, but they can also save you money. Winston Rowe & Associates has access to various financial institutions’ wholesale programs, they can offer you the most competitive interest rates with no up-front fees and reduced financing costs.

Apartment owners with a minimum of 5 units will find a wide array of financing options to meet their individual financing needs including assorted fix rate hybrid loans and prepayment options. Purchase refinance and cash out refinance are also available.

Eligible Properties:

Stabilized properties with at least 5 units in major MSA’s and proven management.
Up to 40% commercial component permitted; student and senior housing eligible for financing.

Loan Amounts:

$250,000 – $10,000,000

Term & Amortization:

Adjustable, 3, 5, 7, and 10 year hybrid loans amortized out for 30 years.

Prepayment Penalty:

Typically step-down prepayment penalties during the fixed rate portion of the loan.

Loan to Value Ratio:

Maximum LTV 75% depending on the quality and program.

Debt Coverage Ratio:

Minimum 1.25:1 DCR

Credit Score:

Minimum middle credit score 680

The goal at Winston Rowe & Associates is to add value to client’s acquisition or refinance by offering a wide range of financing solutions and direct access to top national, regional, and local retail banks, hedge funds and private capital lenders.

 

Hard Money For Apartment Buildings No Upfront Fees

Apartment Financing Best Interest Rates

Trying to find an apartment building loan can be a challenging and time consuming and expensive process to go through on your own.

A hard money loan through Winston Rowe & Associates affords you the opportunity to access the funds necessary to take the next step as an Apartment Building owner.

Whether you need a loan to purchase or refinance a multi-unit apartment building, a mixed-use development, or any kind of commercial project, Winston Rowe & Associates is there for you.

Apartment Building Financing Nationwide:

Quick turn-around times

No upfront or advance fees

All credit histories accepted

Loans ranging from $500,000 up to $5,000,000

Loan-to-value (LTV) up to 65%

1-3 year terms, interest-only

Purchase, refinance and cash out

Flexible underwriting

With the need for alternative sources of capital in the apartment and multifamily market has never been greater.

Winston Rowe & Associates is a capital source that provides flexible, reliable and timely solutions for owners of commercial real estate nationwide.

They quickly analyze and asses prospective clients transactions and provide immediate feedback within 24 hours.

Winston Rowe & Associates provides no upfront or advance fee commercial Apartment Building financing in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Why Invest In Apartment Buildings

Small Apartment Building Loans

Whether you’re buying a single apartment to rent out or a building full of them, you can reap many of the same benefits. You also get the same two key drawbacks — dealing with tenants and owning an investment where your money is locked up and usually not able to be accessed quickly. Ultimately, though, most apartment investors feel that the benefits of owning multi-family property make it an excellent wealth-building vehicle.

Healthy Investment Returns

Even relatively conservative and low-yielding apartments offer healthy returns relative to other asset classes. Many investors are attracted to the cash flow, which, depending on how you buy your apartment, can be anywhere from a few percent to the mid-teens per year, calculated relative to your down payment. However, you’re also paying your loan down, and this adds to the return you’ll realize either when you sell the building and cash in your equity or when you pay the loan off and get an immediate increase in monthly income. While principal reduction may not seem like a major contributor to your return, bear in mind that your mortgage increases its impact, since the growth is relative to your down payment.

Operational Simplicity

Compared with other types of investment real estate, apartments are relatively simple to operate. Your responsibilities are clearly defined, and your tenant relationships are straightforward. This is a significant difference from leased investments such as offices and retail centers where finding tenants can be time-consuming and expensive and the nature of each tenancy can be very different.

Tax Benefits

Like other forms of investment real estate, you can write off all of your expenses with essentially no limit to reduce your taxable income. If you use the proceeds from selling your apartment to buy more investment real estate, you can also defer your capital gains and recapture taxes. You can also depreciate your apartment and write off a portion of its value every year, further reducing your tax liability. Unlike commercial real estate that has a 39-year life, apartments get depreciated over 27.5 years, giving you a larger write-off every year than with other property types.

Owning Apartment’s 

Owning apartments isn’t like having money in the bank. You can’t go to your apartment building and pull your money out whenever you want. Taking out equity through a cash-out refinance can take months and cost thousands of dollars in loan fees. Selling also takes months and could generate many thousands of dollars of commission costs. As such, if you aren’t sure that you want your money to stay invested, apartments might not be a good choice.

Tenants

For many owners, the biggest problem with owning apartments is dealing with tenants. While some tenants are easy to manage, others aren’t. If you don’t have a property manager, you will have to meet prospective tenants to show them units and take calls from existing tenants when something in their unit breaks. Hiring a management company can mitigate some of these problems, but their charges will cut into your profits. In addition, while a management company can cut down on the headache of dealing with tenants, it can’t insulate you from the financial challenges of building repairs, unpaid rent and tenant turnovers.

Apartment Loans No Application Fee

Commercial Real Estate Loans – No Upfront Fees From Winston Rowe & Associates

Apartment Building Mortgage

Winston Rowe & Associates, a no upfront fee commercial real estate financier is offering some of the most competitive commercial real estate loans for the Detroit Metropolitan Market to meet the needs of its clients.

Winston Rowe & Associates is a capital source that provides flexible, reliable and timely solutions for owners of commercial real estate nationwide.

They quickly analyze and asses prospective clients transactions and provide immediate feedback within 24 hours.

Full Spectrum of Commercial Real Estate:

No Upfront or Advance Fees

All Commercial Property Types Considered

Single Family Portfolio Loans

Loan Amounts Starting at $500,000 with No Upper Limit

Purchase, Refinance and Cash Out

Conventional and Fast Hard Money Loans

 

 

10 Rental Markets Where Landlords Make A Killing

Private Money Lending

Stocks aren’t the only asset class with impressive returns. With the help of low homeownership rates and strong mobility demand, the rental market remains attractive for investors, especially in areas of the country experiencing double-digit returns.

According to a new report from RealtyTrac, a leading source for comprehensive housing data, rental property in the United States posted an average annual return of 9.06% in the third quarter. That is down slightly from 9.65% in the same year-ago quarter, but still represents a significant return for landlords.

Furthermore, median home prices rose more than 7% on average from a year earlier. The report analyzed median sales prices for residential properties and average fair market rents for three bedroom properties.

“The single family rental market is still strong, with returns averaging 9% in the 586 counties analyzed,” said Daren Blomquist, vice president at RealtyTrac, in a press statement. “Even so, the market is softening, with those same 586 counties averaging a nearly 10% return a year ago. In the high-risk, high-yield markets, where unemployment and vacancy rates are higher than national averages, the average return was a whopping 19%, actually up from a year ago thanks to a strong increase in rental rates.”

Let’s take a look at the top 10 rental markets where landlords are making a killing, using annual gross rental yields from RealtyTrac.

10. Hernando County, Florida

• Annual gross rental yield: 17.29%

• Vacancy Rate: 5.1%

9. Pasco County, Florida

• Annual gross rental yield: 17.30%

• Vacancy Rate: 8.9%

8. Columbia County, Florida

• Annual gross rental yield: 18.42%

• Vacancy Rate: 11.3%

7. Wayne County, Michigan

• Annual gross rental yield: 19.88%

• Vacancy Rate: 8.9%

6. Spalding County, Georgia

• Annual gross rental yield: 20.35%

• Vacancy Rate: 12.3%

5. Putnam County, Florida

• Annual gross rental yield: 22.63%

• Vacancy Rate: 6.3%

4. Howard County, Indiana

• Annual gross rental yield: 24%

• Vacancy Rate: 6.6%

3. Duplin County, North Carolina

• Annual gross rental yield: 24.4%

• Vacancy Rate: 8.8%

2. Clayton County, Georgia

• Annual gross rental yield: 26.88%

• Vacancy Rate: 16.9%

1. Edgecombe County, North Carolina

• Annual gross rental yield: 41.57%

• Vacancy Rate: 11.1%

Source: USA Today

Renters Face Affordability Crisis – Winston Rowe & Associates

Multifamily Loans

Winston Rowe and Associates, a nationwide no advance fee commercial real estate financier has prepared this analysis of the challenges to obtain affordable housing in the current rental markets.

With increased competition for units, rents are shooting up, and the increases are biting renters’ wallets as they find themselves increasingly getting priced out of the market, with wages failing to keep pace.

Nationwide rents have risen about 6 percent from a year ago, due to rising demand and still-limited supply, CNBC reports. Renters in San Francisco, San Diego, Boston, Baltimore, Washington, D.C., and Chicago are paying more than 30 percent of their wages on a two-bedroom rental, according to an analysis by Trulia. Financial experts often recommend spending no more than 30 percent of wages on housing expenses.

Rental demand is strong and likely will remain so for the foreseeable future, analysts note. Apartment vacancies rose slightly in the third quarter for the first time in four-and-a-half years, but was mostly attributed to more rental supply coming on the market, according to Reis analytics firm.

Winston Rowe & Associates has some of the most aggressive rates and terms available, while managing every step of the financing process from document collection to commitment negotiation and closing.

They have national solutions for conforming and non-conforming commercial loan refinance programs, each designed to provide the most competitive financing terms based on a combination of property constraints, borrower investment and personal objectives.

When you call Winston Rowe & Associates, a principal is always available to speak with prospective clients. They can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

 

North Dakota Apartment Loans No Upfront Fees

WINSTON ROWE AND ASSOCIATES

 

Many commercial real estate investors in North Dakota have been dismayed when they are rejected by traditional banks when they apply for commercial real estate financing.

Somehow traditional bankers see the North Dakota Oil Boom as a onetime temporary thing and down the road no one will be using oil in the future.

Savvy commercial real estate investors searching for apartment financing in North Dakota are turning to Winston Rowe & Associates, a North Dakota apartment lending intermediary, for multifamily properties with 5 or more units.

They offer clients a full spectrum of apartment building loan options to help customize a product to meet each individual investor’s apartment financing needs.

All of Winston Rowe & Associates apartment building financing solutions are offered at competitive rates, so owners and investors can spend less on interest and fees and turn an even bigger profit from their investment in an apartment building or complex.

There are flexible loan terms and payment schedules available to fit the needs of any owner or investor, whether the funding is used on the purchase of an existing building, the construction of a new building, or the renovation of an existing structure. Refinancing loans are available to save current owners money on their mortgage loan payments.

North Dakota Apartment Building Lending Highlights:

No Upfront or Advance Fees

Loans Starting at $500,000. to $100,000,000.

Hard Money for a Fast Close

Super Competitive Hard Money and Conventional Rates

The goal at Winston Rowe & Associates is to add value to client’s acquisition or refinance by offering a wide range of financing solutions and direct access to top national, regional, and local retail banks, hedge funds and private capital lenders.

When you call Winston Rowe & Associates, a principal is always available to speak with prospective clients. They can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

California Quick Close Commercial Loans No upfront Fees

Real Estate Investing

Trying to find bridge financing for your multifamily or non-owner occupied SFR or other property types is challenging in today’s banking climate. Winston Rowe & Associates is there to help.

Commercial real estate investors have been turning to Winston Rowe & Associates.

They are a national commercial real estate financier without the usual up front or advance fees.

The ensuing is the bridge loan funding overview

No upfront fees

Quick close

12 – 36 month duration with no loan pre-payment penalties

$250,000 – $25,000,000 in loan value

Target 50-65% LTV

Cash flowing assets preferred

1st mortgage with personal recourse focused

All product type (Non-owner occupied SFR, Multi-Family, Office and Retail preferred)

When speed and experience are important and crucial to your commercial hard money investing success, a principal at Winston Rowe & Associates is always available to speak with prospective clients. They can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

Winston Rowe & Associates provides no upfront or advance fee due diligence and advisory services in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,   Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

How To Invest In Apartment Buildings

APARTMENT INVESTING LOANS NATIONWIDE ONLINE

Winston Rowe & Associates has prepared this article to provide prospective clients with a strategic overview of the mechanics of investing in multifamily and apartment buildings. Winston Rowe & Associates is a national commercial real estate finance firm specializing in no advance fee loans.

For more information about apartment building investing you can go to http://www.winstonrowe.com or contact Winston Rowe & Associates directly at 248-246-2243.

Overview:

Rental property that has more than one family unit is considered multifamily property. From a duplex (two units), the smallest multifamily property, up from there to larger rental complexes easily consisting of hundreds of apartments.

The advantage of purchasing multifamily properties, not unlike all income property, is that it provides real estate investors with the ability to support debt from the income the property produces.

Understood in real estate investing circles as “using other people’s money”, this idea is crucial to buying multifamily properties profitably and therefore must always be kept in mind because the success or failure of the investment depends on the income the property generates to meet debt service and other obligations required to keep the property.

Enough said. Let’s look at three elements that contribute to this principal, and discuss why they are crucial to buying multifamily units profitably.

Obtaining Financing:

The key to buying any investment property is for you to establish a sound financing package. You want to obtain a loan that doesn’t place excessive burdens on the property, or yourself. Also, given that lenders evaluate multifamily real estate based on income stream and generally structure a loan based on the property’s financial strength as well as the investor’s, bear in mind the significant role the principal of using other people’s money plays in financing the investment.

When applying for a loan on a multifamily apartment, present lenders with clear and concise cash flow reports because you are more apt to obtain a favorable financing package when the property is represented fairly to the lender and the income and operating expenses are shown to be accurate.

Research & Market Analysis:

What tenants are willing to pay to occupy a unit in the apartment is the cornerstone of the investment. Therefore, it’s incumbent upon real estate investors to understand local rental market trends for vacancies and rental rates when buying multifamily real estate property. Rental market trends are easy for investors to recognize, just watch the newspaper or drive around the community noting all rental properties that have vacancies. If you see few for rent ads or signs, or surmise that rents are increasing, it probably signals a shortage of rental units, and a favorable opportunity for you. On the other hand, when lots of rental signs start appearing and rents drop, it could spell trouble for multifamily real estate.

If you’re looking for real estate properties for commercial investing or need background information on an asset? The following link will take you directly to Winston Rowe & Associates Free commercial real estate and investing resources:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

The best time to own multifamily property, naturally, is when vacancy rates decrease and tenants are standing in line to rent an apartment. Apartment property owners can be more selective about the type of tenant they rent to and establish a positive direction for the complex, perhaps even increasing rents.

On the other hand, when tenants become scarce, owners might have to become less selective about tenants and perhaps lower the rents just to fill the units.Be sure not to neglect a rental market survey whenever you purchase multifamily property. It’s always crucial to gauge the rents and vacancy rates.

Economic Conversion:

There might be money to be made in cases where the former property owners have let the property run down and rents had to be decreased to keep the units filled.

If these rental properties are in a good area of town or in an area that is returning to a former higher quality, then the remodeling of a rundown apartment complex can be a profitable venture. Just make sure that you ascertain the cost for remodeling and understand what impact it will have on your income stream.

Pure window dressing for the sake of appearances only, unless it has a positive influence on occupancy levels or rents, is typically avoided by prudent real estate investors. So get a qualified contractor to give you a bid on remodeling. Otherwise, what you surmised as surface issues when you were buying the multifamily units could in fact be a costly can of worms.

In other words, look for an opportunity to upgrade the building and raise rents because it can contribute to a profit, just be sure that you know exactly what you’re getting into.

Pros & Cons of Buying Multifamily Property:

The most obvious advantage of buying any income property is real estate investors can grow wealthy in the long run. Holding on to investment property and simply letting other people’s money payoff the debt, even if there is no immediate cash flow, is what drives people into real estate investing.

Moreover, because multifamily properties serve a basic need in that they provide shelters to those who cannot afford or who do not choose to buy real estate, the downside risk to multifamily investing is limited.

The downside to owning rental property mostly concerns the management problems associated in dealing with tenants. Multifamily properties can be management intensive, and often the reason why investors who purchase rental property hire the services of a professional property management company to deal with the day-to-day issues of running the property. So you can choose to minimize this disadvantage if you care to.

The bottom line is straightforward. Multifamily property provides investors the opportunity to build wealth. Nonetheless, it’s similar to investing in any other type of investment property, whether it’s land or commercial real estate or apartments, it simply requires you to do it correctly, and with a careful eye on the elements discussed here. Here’s to you and your real estate investing success

Winston Rowe & Associates success is measured by their clients’ success, and their mission is to be your source for the most appropriate – and advantageous – apartment building financing solution that helps client achieve their goals.

Winston Rowe & Associates has no upfront free apartment building loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,   Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Aggressive National Apartment Building Financing

APARTMENT BUILDING LENDERS WITH NO ADVANCE FEES NATIONWIDE

Apartment Loan programs from Winston Rowe & Associates encompasses all aspects of multifamily apartment financing.  Whether you are refinancing a stabilized apartment building or acquiring & developing a new apartment complex, their aggressive apartment loans have helped investors across the country achieve their apartment financing goals with larger apartment loans, lower DCRs and faster closings.

Prospective clients with questions concerning their apartment building transactional funding programs can contact Winston Rowe & Associates at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Winston Rowe & Associates structures apartment and multifamily financing solutions utilizing a broad spectrum of traditional and non-traditional capital sources.

They are not tied down by whatever the flavor of the moment is on Wall Street, and can get deals financed which the CMBS world can’t or won’t do, especially in the current structured finance market.

Their primary goal is to be your source for the financing of apartment loans, without up front or advance fees. Winston Rowe & Associates has creative solutions for commercial real estate investors across the nation.

Prospective clients that need to refinance an existing property or you need purchase money – they can help structure the terms that most suitably meets your needs.

Apartment Building Financing Features Available:

No Upfront or Advance Fees
Loan Amount From $2,000,000.
Transaction Funded In 30 Days With Complete Submission
As low as 1.10 DSCR available in some cases
No Lockout & No Prepayment Options Available
Interest Only Option
ARM Programs Available
Non-Recourse Loans Available
Low Fixed Rates ranging on 5-10 Year loans with 30 Year amortized terms.
Conduit Fixed-Rate and Floating-Rate Loans
Fannie Mae and Freddie Mac Loans
Market Rents as NOI

Winston Rowe & Associates understands that in this business very few funding requests will fit neatly in a box and therefore they always look forward to working with clients to identify a unique deal structure that can benefit from their apartment building transactional financing programs.

They also have an excellent knowledge based free investor resource for commercial real estate investing, valuation and analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

 

 

 

An Overlooked Option for Financing Multi-Family Affordable Housing Winston Rowe Associates

Investing In Apartment Complexes Financing Options – Winston Rowe & Associates

COMMERCIAL REAL ESTATE FINANCING ONLINE WITH NO UPFRONT FEES

Investing In Apartment Complexes Financing Options
Apartment building are a great way to build wealth because they always increase in value or are a great hedge on inflation. Winston Rowe and associates is a nationwide no upfront fee commercial finance firm. You can contact them at 248-246-2243

Financing for Apartment Complexes

Winston Rowe and Associates, a no upfront fee commercial real estate financier. They‘ve developed a comprehensive mix of highly customized multifamily and apartment building loan programs.

When it comes to investing in multifamily housing properties, often times the difference between a good investment and a great investment is financing.

For more information about Winston Rowe and Associates you can contact them at 248-246-2243 or check them out on line at HTTP://WWW.WINSTONROWE.COM

Apartment Financing Options:

Joint Venture Purchase and Construction

Capital deployment starting at $10 mm
Liquidity requirement at 10%, in addition to a 10% reserve

Conventional Purchase, Refinance and Cash Out

Nationwide
75% LTV purchase
60% LTV Refinance
Minimum capital deployment $1 MM

Hard Money and Private Capital Purchase, Refinance and Cash Out

65% maximum loan to value
Minimum capital deployment $500,000

Chapter 11 Debtor in Possession Financing

50% maximum Loan to Value
Minimum capital deployment $1 mm

Discount Note Financing

Maximum Loan to Value 60%
NO new cash required
Minimum capital deployment $1 mm

The goal at Winston Rowe & Associates is to add value to client’s acquisition or refinance by offering a wide range of financing solutions and direct access to top national, regional, and local retail banks, hedge funds and private capital lenders.

Winston Rowe & Associates provides no upfront or advance fee commercial Apartment Building financing in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

How To Retire Early Investing In Apartment Buildings

MULTIFAMILY LENDERS WITH NO ADVANCE FEES

We all work hard at our J.O.B., don’t we? We work hard each day and hope to retire when were 65, that’s the American dream, right?

Many of us are looking for something better, maybe a scenario where we can retire earlier or perhaps enter a state of semi-retirement. The answer: investing in apartment buildings.

Imagine working really hard to find a good building at a fair price, putting the financing together, and hiring a property manager to run the whole thing. Was that a lot of work? Of course. But don’t you work hard anyway? Here’s the difference….

Apartment Ownership – What’s It Really Like?

Imagine the day you close on the building and your property manager takes over. Ask most apartment building owners, and they will say they spend anywhere between 2 and 5 hours per week on their building if its managed by a professional management company.

What have you done? You went from a job that took 40-50 hours of your time each week to one that takes a fraction of that. And you replaced part or all of the income of your job with that from the apartment building.

You’re working less while maintaining your income.

What would this mean to you? Maybe you could spend more time with your family. Maybe you want to travel more. Pursue a hobby. Give back. Or maybe do more de”als.

How is something like this possible with apartment buildings? The answer is in how apartment buildings are valued.

How Do you Make Money On Apartment Investments?

The value of an apartment building is driven by its net operating income, the amount of income left after all expenses are paid. The more money the building spits out after all expenses, the more its worth.

In many parts of the country, a building is worth 10 times its net operating income. This 10 times multiplier is referred to as the capitalization or cap rate for short. Don’t worry about this for now – its not important to the point I’m trying to make. Lets just use a cap rate of 10 for our discussion.

Lets say a building has a net operating income of $100,000, which would make it worth $1M. If you could somehow make the building generate $10,000 more each year, maybe by increasing rents or decreasing expenses, you would have generated $100,000 in value (a cap rate of 10 times the additional income of $10,000 is an additional $100,000 in value).

Lets look at a more specific example, so that you can start visualizing how this math could work for you in real life.

Assume you bought a 10-unit building for $540,000, and you had to put 30% down. The building was bought at a 10-cap based on our formula we’ve used so far. Which means its net operating income (or NOI) is $54,000 per year, times our cap rate of 10 is $540,000. The income per unit is $1,000, and the expenses are 55% of the income. The building is in great shape and has been managed by the owner himself.

So far there is nothing special about this deal.

However, suppose you found out that the average market rent in the area is actually a $200 higher per month. Suppose further that you meet a property manager who manages two similar buildings in the area, and he tells you that his expenses are only 45% of income.

Lets say it takes us 3 years to get the building to where it should be, i.e. with each unit bringing in $1,200 per month and lowering our expenses to 45% of income. Here’s how this would impact our financials:

By making small improvements each year, we have added $25,000 to our Net Operating Income. What is our value now?

Our new NOI is $79,000, so our value now is about $790,000 ! That is an increase of $250,000 in three years! Isn’t that incredible?

But that’s not all.

You also had between $2,600 and $4,700 in monthly income from this building over those three years.

 

Apartment Market Has Strongest Quarter Since 2000

NO UPFRONT FEE COMMERCIAL APARTMENT LENDERS

The second quarter of 2014 has emerged as the strongest quarter for the U.S. apartment market in nearly 14 years, according to early release figures from Axiometrics, the leading supplier of apartment data and research.

Effective rent growth was 2.4% on a quarterly basis nationwide in April-June 2014, the highest quarter-to-quarter rate since the 2.9% of July-September 2000. Occupancy in the second quarter of 2014 was 95.0%, the strongest since the first quarter of 2001 (95.6%).

Both rent growth and occupancy exceeded expectations.

“The year started slowly for the apartment market, perhaps due to weather, but it experienced a major reacceleration during the second quarter,” Axiometrics Vice President of Research Jay Denton said, referring to the major winter storms and bitter cold temperatures that gripped much of the nation during the early part of the year. “Effective rent growth was soft in January and February, but the period from March through May was the one of the strongest three-month stretches we’ve seen in the 19 years we’ve been tracking apartments.”

Another reason for the strong apartment performance just may be the falling home-ownership rate, Denton added. U.S. Census Bureau statistics show that the home-ownership rate in the first quarter of 2014 was 64.8%, the lowest in 19 years – since the second quarter of 1995, when the rate was 64.7%.

“Demographics, along with the increasing choice to rent rather than own, continue to play in the favor of apartments,” Denton said.

The second-quarter effective rent growth was a big improvement from the first-quarter quarter’s 0.5%, an increase from the -0.9% recorded in the fourth quarter of 2013, measured on a quarter-over-quarter basis. Occupancy was up 60 basis points from the first quarter’s 94.4%, ending a two-quarter streak of decline.

Annualized effective rent growth was 3.3% in the April-June 2014 time frame, up from 2.9% in the January-March period. That matches the second-quarter 2013 rate and marks the second straight quarter in which the annualized effective rent growth has increased.

These increases are taking place with 180,000 new units having been delivered in the past year.

“There is more supply on the way, but the apartment market is merely returning to a more ‘normal’ level of construction,” Denton said. “It is important to note that total residential construction, including single-family homes, is still well below the historical norm. This prolonged period of lower-than-normal residential construction has allowed apartment occupancy rates to surge to a level not achieved since 2001.”

The second-quarter strength is further confirmation that, as Axiometrics has reported previously, the rental base is changing, Denton added. Most of the new units are geared toward higher-income individuals.

Most of these high-rent submarkets are in the urban core, where many millennials and others like to live to be closer to their work and play. Also, many in this age cohort group like the flexibility of renting versus owning, while others might be falling victim to stringent mortgage-lending requirements.

But, Denton said, the renters outside the core are staying put, and they, too, might not quite make the mortgage-qualification standards because of credit and/or income issues.

National Summer Months Crime Spike Property Protection Tips

NATIONAL APARTMENT BUILDING LENDERS NO UPFRONT FEES

 

Winston Rowe & Associates, a national no upfront fee apartment building financing firm developed this article to provide security tips for protecting your apartment building and apartments during the summer crime months spike.
With both the high mercury and summer vacations in full swing, incidents of crime increase, too. And it’s no coincidence.

According to FBI data, property crimes such as burglary, property theft and motor vehicle theft have risen as much as 9 percent between May and September over the past five years – the highest percentage in the calendar year.

Inside Your Residence:

Make sure dead-bolt locks are installed on all outside doors. They should not require a key from inside so that they’re easy to unlock if you need to get out quickly in case of a fire or other emergency.

Install peepholes on your outside doors so you don’t have to open them to see who’s on the other side. If your outside door has window panels on the side, cover them with blinds or curtains to keep out unwanted eyes.

Keep your blinds or curtains closed when you’re not home, especially on your main or ground-level floor.

If you have a sliding glass door, consider adding a defense other than the standard lock, such as blocking the track or installing a protective film that prevents the glass door from being smashed in.

Outside Your Residence:

Trim bushes and maintain landscaping to avoid creating unwanted hiding places for would-be intruders.

The exterior of your property should be well lit. Consider installing motion detector lights.
Be on the lookout for graffiti tags and vandalism, and fix it as soon as it happens by replacing signs, painting over it or making repairs as necessary.

Where You Park:

Always lock your vehicle, roll up widows and keep valuables out of sight, no matter where you park. This includes everything from high-dollar items, such as your cell phone or laptop, down to the change in your cup holder.
In any parking lot, park under a light, if possible.

If you have a garage door, always close it. Empty garages are an invitation for thieves to steal tools and other valuables.
Lock the door from your garage to your home, and remove your garage door opener from your car if you need to park outside overnight.

Winston Rowe & Associates, a national advisory firm that structures apartment and multifamily financing solutions nationwide. With no upfront or advance fees, for more information about them, you can give them a call at 248-246-2243

Winston Rowe & Associates has apartment building as well as other commercial real estate financing solutions in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

10 Best Cities for Retirees to Rent Homes or Apartments

NATIONAL APARTMENT LENDERS NO UPFRONT FEES

For retirees looking for a place to settle down more permanently, it pays to find a destination that meets the needs of this new lifestyle. Realizing rental needs change as people get older, Apartments.com evaluated cities across the country on a variety of key lifestyle factors:

High inventory of affordable apartments
Thriving economy
High retirement population
Weather
Flexible leasing options for short or long stays

The results, the 2013 “Top 10 Cities for Snowbirds and Retirees, places Austin, Texas at the top of the list, making it the number one hot spot for both snowbirds waiting out winter back home and those in it for the long haul, looking for a destination to lay down their roots and enjoy their retirement.

Average rent for a 2 bedroom apartment in Austin will run around $1,200.

The remaining cities on the retiree’s top 10 list, in order, include:

Las Vegas and Henderson, Nevada
Scottsdale, Arizona
San Antonio, Texas
Phoenix, Arizona
Dallas, Texas
Jacksonville, Florida
Plano, Texas
Overland Park, Kansas
Mesa, Arizona

How To Get An Apartment Building Loan With No Upfront Fees

WINSTON ROWE AND ASSOCIATES MULTIFAMILY LOANS

 

Winston Rowe & Associates, a national no advance fee apartment building consulting firm has the experience and expertise investors have come to expect for the due diligence and advisory service they need when structuring an apartment building loan.
Whether you are purchasing an apartment building or just need some help with refinance, let them help you out and reduce the anxiety of getting a loan.

When speed and experience are important and crucial to your apartment building success, contact Winston Rowe & Associates, a principle is always available to speak with prospective clients. They can be contacted at 248-246-2243 or email them at processing@winstonrowe.com

Winston Rowe & Associates will go over everything you will need to determine your loan amount but these are all very easy things and you probably have everything already.

The apartment financing industry is very competitive and many companies will give you a quick spiel that sounds good but might not tell you every detail.

Winston Rowe & Associates provides unparalleled service to its clients and is a recognized leader in structuring apartment building financing solutions.

They also have many other solutions that meet almost every need.

With their best business practices model ensures that their clients receive lighting fast funding with the most aggressive rates and terms available, while managing every step of the financing process from document collection to commitment negotiation and closing.

Winston Rowe & Associates provides no upfront or advance fee due diligence and advisory firm in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Refinancing Apartment Buildings No Advance Fees

REVIEW WINSTON ROWE AND ASSOCIATES ON LINE

Winston Rowe & Associates structures customized apartment financing solutions through their best business practices advisory and due diligence methodologies to assist the individual and investment needs and requirements for apartment building investors nationwide.
Winston Rowe & Associates Multifamily Solutions:

Solutions starting at $500,000. through $100,000,000.
Conventional and Bridge Solutions
Debtor in Possession
Balloon Payments
Cash Out Refinance
Portfolio Repositioning
Rehabilitation & Re-Tenanting

The goal at Winston Rowe & Associates is to add value to client’s acquisition or refinance by offering a wide range of financing solutions and direct access to top national, regional, and local retail banks, hedge funds and private capital lenders.

Healthy Living Apartment Communities Where People Want To Live

Apartment Building Financing

Winston Rowe & Associates, a national no advance fees commercial real estate financier has developed this news article to provide some advice to apartment community owners with some tenant retention methodologies.
Health is a very important aspect of life. It is also something that is hard to make a priority amidst our busy schedules. Creating programs in your community can help promote good health and encourage people to work together and help socialization build between tenants. Thereby creating a community where families want to live.

Here are four tips to create healthy community initiatives.

Have a community garden; If there are spaces available outside or on the roof, make a garden where people can grow their own crops. You can either do a community garden or have individual plots which residents sign up for. Residents then have the ability to plant and eat their own crops, encouraging eating whole, fresh foods.

Host healthy cooking classes; Many people are not great chefs in the first place, but hosting classes where you can gather residents and teach them healthy techniques for preparing meals, they can become much better cooks.

Providing these opportunities can make a place where residents can come together, learn, enjoy good, healthy food together, and hopefully apply the things learned in their own kitchens.

Start running teams; Provide an opportunity for people to gather together, and instead of making exercise a chore, it will make exercise a social party! People can get friends to go running together, they can keep each other in check, and enter into community races to run with one another.

Start weight loss competitions; Creating a community goal to lose weight can encourage more people to jump on and work on their health. Have people set goals, track progress, and provide awards.

The goal at Winston Rowe & Associates is to add value to client’s acquisition or refinance by offering a wide range of financing solutions and direct access to top national, regional, and local retail banks, hedge funds and private capital lenders.

Hard Money Commercial Loans No Upfront Fees

Apartment Mortgage

Winston Rowe & Associates, a national no upfront fee advisory and due diligence firm specializes in structuring complex debt, private equity, private capital (hard money), and agency commercial real estate financing solutions.

Commercial real estate types include; Apartment Buildings, Hotels, Office Buildings, Medical Buildings, Shopping Centers, Assisted Living

Facilities, Senior Housing, Student Housing and Mixed Use properties, no raw land please.

They also have many other solutions that meet almost every need. Check them out online at http://www.winstonrowe.com

CRE investors have been turning to Winston Rowe & Associates, across the nation because there is a shortage of reliable, ethical and honest capital sources in the current banking market place.

Winston Rowe & Associates has strong relationships with a finite number of direct private capital, private equity, hedge funds, agency investors and regional and national commercial banks, each with a highly targeted commercial real estate financing practice.

Their expertise adds value and speed, structuring solutions for their client’s complex and challenging financing requests. In days, not weeks or months.

When speed and experience are important and crucial to your commercial real estate investing success, a principal at Winston Rowe & Associates is always available to speak with prospective clients.

They can be contacted at 248-246-2243 or email them at processing@winstonrowe.com

Hard Money Bridge Loans Close In Few Weeks:
Apartments, Office, Hotels, Shopping Centers, Medical Buildings
Minimum Loan Amount $250,000 to $100,000,000.
Two Week Fast Close with a Complete Loan File
Rates Starting at 8% Interest Only
Terms One Day to Three Years
Maximum Loan to Value 65%
Minimum FICO 680
Purchase, Refinance & Cash Out Refinance
Debtor In Possession (DIP) Chapter 11 Exit Financing
Discount Note Payoff
United States Only

They have a best business practices model ensures that their clients receive lighting fast funding with the most aggressive rates and terms available, while managing every step of the financing process from document collection to commitment negotiation and closing.

What To Do When Tenants Move Out To Keep Your Costs Down

Multifamily Family Building Investing

Apartment Building Investors  investors have been turning to Winston Rowe & Associates, across the nation because there is a shortage of reliable, ethical and honest capital sources in the current banking market place.

Winston Rowe & Associates has strong relationships with a finite number of direct private capital, private equity, hedge funds, agency investors and regional and national commercial banks, each with a highly targeted commercial real estate financing practice.

Checking the condition of the property is a must for two reasons:

You discover hidden damage while there is still time to deduct costs from the former tenant’s security deposit; and,

The new tenant won’t lose faith in you because the unit needs several repairs right out of the gate.

So, when it comes time for turnaround, make sure you take the time to thoroughly check out the property:

If possible, ask the exiting tenant to point out any minor repair items they may have been ignoring.

Check out the deadbolt locks on all exterior doors and look for signs of damage or wear.

Turn on all lights and replace any dead bulbs. This may reveal bigger problems like tripped breakers or other electrical problems.

Make sure the appliances are fully-functional.

Open up the blinds and check for damage to windows and sills.

Replace batteries in smoke detectors.

Check the water pressure.

Run the heat and air. Make sure thermostat is at an economical setting while the property is vacant.

Looks for signs of water leaks check floors, around facets and drains, and washing machine hoses.

Check for signs of pests.

Use this time to repair the minor items that can run up larger repair bills later on.

Winston Rowe and Associates, a no advance fee commercial real estate financier has commercial real estate financing solutions for qualified clients in the ensuing states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

 

Winston Rowe & Associates Completes $1,000,000 Apartment Building Loan

WINSTON ROWE WEB SITE

Winston Rowe & Associates a national no upfront fee commercial real estate financier is pleased to announce the financing of a $1,000,000 129 unit apartment complex in Vicksburg, MS.

This was an extremely challenging transaction to complete their clients business declined when the recession hit, business plummeted, the personal credit score dropped, and owed back taxes and the apartment building suffered significant deferred maintenance.

Once the borrower was able to stop the free fall, the client’s financial situation was such that he was unable to find financing through traditional lenders.

At first glance, a half-vacant apartment building in Mississippi, with back property taxes and whose owner had less than ideal credit might not seem appealing to most lenders, but Winston Rowe & Associates was able to look past the flaws and develop a custom solution for their client.

Despite being half-vacant, the property had enough equity to provide an adequate loan to pay off the delinquent taxes, rehab the vacant units, and pay off the existing mortgage. By keeping a low loan-to-value, their capital source was willing to take a chance on this loan, despite the borrower’s poor credit.

Winston Rowe & Associates is always here to help and understands that many good borrowers were hurt by the recession.

For more information about Winston Rowe & Associates you can check us out online at http://www.winstonrowe.com or give us a call at 248-246-2243. A principal is always willing to speak with prospective clients.