May 11, 2019
John Darrow is an underwriter with Red Capital. He specializes
in SMALL BALANCE- AGENCY loans under $7 million for NEW apartment
buyers. In some areas of the nation…they will lend up to 80%
leverage. He explains the differences between NON RECOURSE
apartment lenders Fannie Mae and Freddie Mac. These two AGENCY
lenders are similar, BUT they have important differences that YOU
need to understand. REMEMBER, Fannie Mae and Freddie Mac will only
lend on historically stabilized apartment buildings. They are
current cash flow lenders. They will NOT finance a distressed asset
(low occupancy and low NOI). Longer interest rate term, higher
leverage, and non-recourse are some of the benefits of using AGENCY
financing for apartment investing.
You should be able to answer these questions:
What lender will include REHAB into their loans? Can you get a NON RECOURSE loan in a small town with 30 years amortization? Can you do a 10 year fixed with 10 years of INTEREST ONLY? Why are these apartment loans typically better than local bank loans? What type of prepayment penalty can I expect? Can I lock my rate upfront?
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Are you interested in learning more about how Multifamily Syndications work? Please visit www.spiadvisory.com to learn more about Michael Becker’s Real Estate Syndication business with SPI Advisory LLC.