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Before you purchase your first multifamily, you should ask yourself 3 questions to determine what type of loan you can qualify for:

  1. Is the property stabilized (yield play) or distressed (value play)?
  2. What is your ownership experience with multifamily (5 units and above) real estate?
  3. What is your net worth and liquidity?

Let’s take these questions one by one.  

1. Is the property stabilized (yield play) or distressed (value play)?

Stabilized property characteristics:

  • At least 90% occupied for the past 90 days
  • No major rehab needed (less than $5,000/unit)
  • Clean and accurate historical financials to show consistent income/expenses (no large income or expense swings)

Distressed property characteristics:

  • Under 90% occupancy for past 90 days
  • Large rehab needed (more than $5,000/unit)

2. What is your multifamily ownership experience?

Experienced operator:

  • At least 12 months on multifamily ownership.  Managing member or guarantor on multifamily property (5 units or more)

New Investor:

  • No experience, but a lot of enthusiasm

3. What is your net worth and liquidity?

Net worth must be equal to or greater than the loan amount.

Liquidity must be a minimum of 10% of the loan amount in cash or marketable securities not including the down payment.

Assuming you meet the net worth and liquidity requirements:

  • Stabilized Property + Experienced Operator= Non-recourse loan (Agency or CMBS)
  • Stabilized Property + New Investor= Recourse loan (Bank)
  • Non-stabilized Property + Experienced Operator= Recourse loan (Bank)
  • Non-stabilized Property + New Investor= Recourse loan (Bank)

Typical Non-Recourse Loans terms:

  • 75-80% Loan to Cost
  • 5 or 10 year term
  • 30 year amortization
  • No personal guarantee of loan shortfalls

Typical Recourse Loans terms:

  • 70-75% Loan to Cost
  • 5 year term
  • 20 or 25 year amortization
  • Personally guarantee any loan shortfalls


If you are looking at acquiring or refinancing a multifamily property, give me a call at 214-300-5035 or send me an e-mail at