Learning Center

Welcome to our Learning Center. Below you will find helpful articles to help you understand the many intricacies related to investing in commercial real estate and commercial mortgage financing. There are a lot of articles that discuss investing in, and financing, multifamily properties, as apartment and multifamily buildings are a popular start for investors looking to invest in commercial real estate.

We continually add helpful information to this page, so check back often to stay up to date on market trends.

 

Fannie Mae and Freddie Mac 2022 Update

The Federal Housing Finance Agency (FHFA) is a governmental agency that dictates policy for Fannie Mae and Freddie Mac. Fannie and Freddie are two of the largest sources of apartment loans and multifamily mortgages nationwide, as they purchase apartment loans from banks and other lenders. FHFA policy changes determine how aggressive lenders will be in the multifamily market. [...]

Investment in Manufactured Home Communities

Investments in manufactured home communities performed very well during The Covid-19 pandemic and are expected to outperform as the economy recovers. New inventory is limited as renters continue to look for more economical living conditions. The large spike in unemployment during the pandemic brought on a strong demand for lower priced housing options. [...]

Covid-19 Pandemic Affects Entire Commercial Real Estate Market

The pandemic changed the world in early 2020 as the virus affected every segment of the real estate market.  Social distancing and stay at home mandates had severe effects on real estate.  Retail properties, hotels and motels, and leisure properties in general were decimated, while essential retail, medical offices, and warehouse properties for e-commerce companies did exceedingly well.  Close to a half million people have died from the coronavirus so far, although deaths and hospitalizations have begun to slow down.  The health crisis has caused employers to lay off some workers and force others to work from home. [...]

How To Get The Best Rates On An Apartment Refinance

Are you looking to refinance your apartment? In today’s market with historically low interest rates, many apartment owners are wondering how to qualify for the best rates. It’s important to understand that there may be things that have happened since you last financed your apartment building that could adversely affect your ability to refinance. Underwriters will take a look at factors such as subject property value, loan-to-value ratio, debt-service-coverage ratio, borrower’s net worth, liquidity, and credit rating. [...]

What Do Underwriters Look for When Evaluating Apartment Loans?

If you’re interested in obtaining financing for your multifamily building, it’s crucial that you understand what commercial mortgage underwriters look for. The lending industry as a whole has changed a lot over the past decade and commercial lending has not been an exception. This article will detail some of the most important things to consider before submitting your multifamily loan for approval. [...]

What You Need to Know About Freddie Mac SBL Multifamily Loans

Freddie Mac is one of the biggest sources of multifamily loans in the country. In October 2014, they announced the addition of their Small Balance Program (SBL) apartment financing. The SBL program finances loans between $1 million and $7.5 million (although in the commercial real estate world “small loans” can often refer to loans under $15 million). Freddie Mac purchases loans from lenders and securitizes pools of over $400 million. Since their inception, they have funded over 10,385 loans totaling over $27 billion in volume. This blog post will introduce you to some of the basic criteria, details and highlights of the Freddie Mac SBL program. [...]

How to Calculate Debt Service Coverage Ratio for Apartment Loans

Many investors new to commercial real estate have trouble getting a handle on the various metrics used in the industry. In fact, there are some experienced professionals who don’t actually have a clear sense of how to define these metrics. The DSCR or debt service coverage ratio is one of the most fundamentally important concepts in the commercial mortgage space. When it comes to financing your property, every commercial lender will utilize this metric. It therefore behooves you as an investor to really understand what DSCR is all about. If you don’t feel completely comfortable with this topic, this blog post is for you.[...]

Apartment Occupancy Levels – Concern in Some Major US Markets

Due to recent economic events and the Covid-19 pandemic, some classes of commercial real estate have been hit very hard. Retail properties have suffered as more people stay away from stores and shop online. Office properties have suffered as more employees work from home. Hotels, motels, and restaurants have been decimated as customers have stopped traveling and eating out. The US apartment market has obviously not seen the same problems as these other asset classes, but we are seeing signs of weakening in the market in some major US markets. [...]

Covid-19 Lending Update: What’s Hot and What’s Not

The global Coronavirus pandemic has wreaked havoc on the nation’s economy and has severely impacted the commercial real estate market.  After more than six months, some states are trying to get back to normal, while others are experiencing a second wave of school and business closures.  Many commercial property owners have experienced serious hardship, and a devaluation of their properties, as a result of poor collections, due to tenants who are unable to pay their rent.  As a result, most commercial real estate lenders have either stopped lending or have tightened up their underwriting guidelines.  Here is a current lending update on various property types: [...]

Covid-19 and the Commercial Real Estate Market

The Covid-19 pandemic has created havoc on Americans’ health and the health of their businesses. April 1st marked a major due date for rent payments for millions of businesses large and small, and reports from around the country indicate that many were facing great difficulty. [...]

How to Invest in an Apartment Building

As a commercial mortgage broker with almost 35 years of lending experience, I am often approached by first time investors who are looking to buy an apartment building as an investment.  These new investors want to understand the steps involved in locating and purchasing their first building.  The following guide should be followed: [...]

Are You Shopping for an Apartment Building Loan?

We specialize in apartment building financing on a nationwide basis. We have a special program for loans of $1,000,000 to $5,000,000 that I’d like to discuss with you today. These loans are available for purchase or refinance and allow for cash-out refinancing. Some of the features and benefits of our program include: [...]

How to Qualify for an Investment Property Loan

Lenders look at many factors in determining whether to approve or reject an investment property loan. Underwriters will investigate the personal qualifications of the borrower as well as the fundamentals of the subject property. Some of these factors include [...]

How To Get an Investment Property Loan

They say that saving the first million is the hardest. The same may hold true for buying your first investment property. Many people entertain the idea of owning an investment or rental property, but for most, that’s where it ends. However, if you are serious about investing in this lucrative market, and looking to buy an investment property, there are some things you should be aware of upfront to make this process go as smoothly as possible.

If you are considering buying a commercial property, or refinancing your existing loan, now is the time to act before rates increase. [...]

How to Buy an Apartment Building

Many new investors wanting to know how to buy an apartment building do not adequately prepare themselves before contacting an apartment mortgage lender and submitting an apartment loan application. This leads to a high level of rejection for the new investor, and a lot of wasted time by the lender’s underwriting staff. The following guide outlines the steps a new borrower should take before attempting an apartment building purchase. Here is some information on how to buy an apartment building that can help the borrower before applying [...]

Glossary Of Terms

-A- ADJUSTABLE RATE MORTGAGE – also known as an “ARM” loan, is a mortgage with an interest rate that changes after a certain number of years. [...]

How to get the Best Terms on a Commercial Mortgage Loan

When it comes to refinancing your commercial mortgage, first you want to know if you will qualify. Many factors will be reviewed to determine if you will qualify for a commercial property loan, including: property value, loan-to-value ratio, debt-service-coverage ratio, net worth, liquidity, and credit rating. If you are a good candidate for refinancing, your main goal will be to get the lowest rate and best terms possible. [...]

What Are Commercial Mortgage Lenders Looking for These Days

Apartment building loans have always been a favorite as far as commercial lenders are concerned. The fallout from the housing market has caused a ripple effect that pushed many families into the rental market. Now, many people are opting to rent over buying. The housing market crash has made the market for apartment building lending very strong. All of these forces are driving up demand (and prices!) for apartment properties. Other favorable types of properties include: retail centers with strong national anchors (such as supermarkets), medical and general purpose office buildings, and other properties occupied by strong tenants with long term leases. Lenders also like small business owners that own their own properties and have demonstrated an ability to generate strong, positive cash flow in their businesses. Another property type popular with investors and lenders are single-tenant, net-leased properties leased to companies such as Walgreens, CVS, AutoZone, Dollar General, etc. [...]

Uncomplicated Underwriting

Loan applications are put together in many different ways before they land on an underwriter’s desk. Some borrowers and originators submit a simple one-page request, while others submit reams and reams of paperwork upfront. [...]

30 Years of Mortgage Lending Experience

I have been involved in mortgage lending for over 30 years. My company, Select Commercial, focuses on originating commercial mortgage loans for the owners and purchasers of commercial real estate nationwide. Our clients range from first time commercial property buyers to seasoned investors who come back repeatedly each time they purchase a new commercial property or need to refinance an existing commercial mortgage loan. We have successfully financed all types of properties, including apartments, retail, industrial/warehouse, and office buildings. We have special programs for small business owners who are looking to purchase or refinance their own business properties – many of these properties are single and special use properties that are often rejected at local banks – such as gas stations, restaurants, motels and more. [...]

How to Qualify for a Great Rate When Refinancing Your Apartment Building

When it comes to refinancing your Apartment Building the first thing you’ll want to know is how to qualify for the best rate. There may be things that have happened since you financed the building that could negatively affect your ability to refinance. Some of the factors that will be underwritten include: property value, loan-to-value ratio, debt-service-coverage ratio, borrower’s net worth, liquidity, and credit rating. If you are a good candidate for refinancing, your main goal will be to get the lowest rate and best terms possible. [...]

What are Investment Properties and How to Use an Investment Property Calculator

Investment properties include:

Apartment Buildings – apartment properties are a great way for small and large investors to obtain investment properties. In today’s economy, many people are choosing to rent rather than purchase a home. The market for apartment building purchases is very strong and many investors are choosing to buy apartment buildings as investment properties. [...]