As a real estate investor, you can expand and diversify your portfolio by investing in multifamily properties of five or more units. These properties can be purchased, potentially renovated, and turned into cash-flowing rentals. In the current market trend favoring renting over buying, multifamily investments offer attractive returns.

For new investors entering this field, securing financing for multifamily properties involves:

1) Financing Options: Explore options such as specialty financing companies for loans. These private lenders provide faster closings and competitive rates compared to traditional banks. Seek straightforward terms, no hidden fees, and streamlined underwriting.

2) Application: After selecting a financing partner, complete an application. Credit score, often around 670, is crucial, unless part of a large entity (630+ score). Other factors include a 20% down payment, multifamily investment experience, and establishing a loan entity.

3) Underwriting: The chosen property undergoes underwriting, evaluating factors like Debt Service Coverage Ratio (DSCR), location, inspection, and appraised value. A DSCR of 1.20 or higher is favorable. This process takes about 3-4 weeks for refinancing and 4-5 weeks for purchase and rehab deals.

4) Closing: After pre-approval and property validation, the deal closes and funds. Monthly interest payments commence, and debt repayment occurs through property cash-flow. Refinancing into a long-term loan is an option at the term’s end.

Multifamily investing enhances portfolios and generates cash-flow amid a robust market. Understanding the financing process enables informed decisions aligned with your growth goals. ManassetGlobal offers leading multifamily financing for investors nationwide.