When analyzing a property, what interest rate should I expect to get if I’m (or someone else) is putting down 10% I know that’s kind of a vague question, so any direction, including what all might affect the overall interest rate would be helpful.
Thanks,
Mike
LOL That there’s a “moewhittle” kind of vagueness! j/k
I would say if you found financing with only 10% down, on multifamily units (which is a vague descriptor in itself), your interest rate will be astronomical.
Otherwise, rates are offered based on equity, market position, location/condition (a,b,c, or d class units), performance history, occupancy levels, etc. etc.
So, assuming you are financing a 15-year old building, in a clean, nice, prosperous area, the seller is carrying 20% down, and you are putting up 10% down, you have “adequate” reserves, this is a 20-unit building worth $4M, the occupancy history is hovering above 95%, and you’re looking for 70% LTV (loan to value), you might see rates as low a 3.5%. However, they could easily skyrocket if anything is dysfunctional about the property, it’s current performance, or other series of dysfunctional things.
Bottom line …it depends.
‘It Depends’ is the correct answer…it’s all about your ability to negotiate with the seller and/or a bank/investor. The more confidence they have in you and your ability to pay, added to your ability to negotiate, added to how much they do not want that stinkin’ property, then you come up with an interest rate!
Hope that helps.
Rob