Apt. Building Financing...

I’m trying to gauge how tight lenders have become for financing on apartment buildings (i.e. 6-12 units).
I’d really appreciate any feedback on the following scenario. I know that there are additional specific details that would be considered.

  • Co-borrowers. Both have stable full time jobs with good salaries.
  • Excellent personal and business credit
  • LLC has existed for 2.5 years
  • 4+ years experience in REI
  • Building (6-12 units) would be in “good” shape. Perhaps needing cosmetic/minor work and more attentive management to reach full potential. But the building WOULD BE performing as is. It might have rents that are ~15% below market b/c of lazy management or the need for cosmetic work, for example.
  • CAP = ~9%
  • 20-30% down payment
  • Would be willing to go Full Doc, BUT… a portion of the down payment funds would come from A) $$ from equity lines on other properties and/or B) private investment from an individual (which would be “secured” only by a promissory note; would NOT be in “second position”).

It’s this last variable that I’m obviously most concerned about.
I know that every lender is a little different, but considering the other factors, how big of an issue would “unseasoned” down payment money be?
I’m trying to anticipate how attractive/unattractive a scenario like this would look to a lender.

Thanks for any feedback.

Sent you an email on this. Yes there are commercial lenders that have no seasoning required for the down payment.

Need to know NOI, NOE, gross rents, etc., to evaluate the merits of debt service & cash flow—can you share more?

There are too many options to suggest based upon the limited info provided.


Scott Miller


I do not have a specific property under contract at the moment, but am trying to get some general opinions about my scenario and, specifically, the down payment seasoning issue.
Here’s a sample deal for the sake of discussion:
GOI: $52200
NOI: $28710
Hope that helps some.

OK, here are some random thoughts:

  1. Using the income capitalization approach, the property you are entertaining is worth 287,100 (Value = NOI/Cap Rate).
  2. Approx. debt service on a 80 LTV loan would be approx. 19,761.
  3. Based upon your NOI estimates, the DS coverage ratio would be approx. 1.45%.
  4. Here are some of your options based upon a no seasoning of funds to close allowance:
  • 85 LTV with a SISA submission
  • 90 LTV with a NINA submission

If I knew where the property was located, I could outline further options…

Hope this helps.


Scott Miller