North Coast Financial are asset-based lenders who are primarily concerned with value of the property and the borrowers’ down payment (or remaining equity for refinance). The focus on value and borrower’s equity allows for providing fast approvals and funding to real estate investors. It also allows for overlooking of potential blemishes on a borrower’s record such as bad credit, foreclosures, short sales, bankruptcies and loan modifications.
There are multiple types of multifamily property including:
- Fourplex (4plex)
- Larger multiplex properties
- Apartment buildings
Hard Money Financing for Duplex, Triplex, Fourplex or other Multiplex Property
Duplex, triplex, fourplex or other multiplex properties are a popular investment vehicle for real estate investors. The right multifamily property can provide attractive returns in the form of cash flow as well as appreciation. Investors choose to use hard money financing for the acquisition of a multifamily property for various reasons.
In many situations a real estate investor doesn’t have time to wait for bank approval and funding. An opportunity may arise that requires a short escrow period and rapid financing in order to secure the property. Waiting for a bank loan would likely result in the property being purchased by another investor as the bank approval and funding process can take over 30-45 days. A hard money lender can approval and fund a hard money multifamily property loan within a week if needed. Once the real estate investor has purchased the multifamily property with a hard money loan they then have the time to explore long-term financing with lower interest rates.
Banks and conventional lenders are often known for their strict and arbitrary lending criteria. This may result in a real estate investor having their multifamily property loan request denied. Multifamily hard money lenders have much more flexibility to get a loan funded. Hard money lenders are also able to overlook poor credit and other issues on an investor’s record that would cause a bank to deny a loan request.
Owner Occupied Multifamily Hard Money Loans
In some situations, a real estate investor wishes to purchase a multi unit property (such as a duplex, fourplex or larger multiplex) and live in one unit while renting out the other unit(s). Obtaining financing for this type of scenario may be challenging as it is outside the normal criteria for the majority of lenders.
North Coast Financial has the necessary licensing and expertise to provide hard money financing to real estate investors who intend to occupy a unit within the property.
Hard Money Loans for Apartment Buildings
Real estate investors typically use hard money loans for apartment buildings in situations where the investor needs to acquire a specific property immediately and doesn’t have time to wait the conventional lender to approve and fund a purchase loan. Hard money lenders such as North Coast Financial are able to approve and fund loan requests very quickly. Once the apartment building has been secured with the hard money loan the investor can begin the longer process of refinancing with a bank loan in order to obtain a long-term and lower cost loan.
Real estate investors who already own an apartment building with an existing loan and sufficient equity may decide to take out a hard money 2nd loan against the property. The loan proceeds may be used to make upgrades or repairs to the apartment or to reinvest in another opportunity elsewhere.
Multifamily Loan Rates
Multifamily loan rates from hard money lenders are typically higher than what is available from long-term conventional lenders. Expect rates in the range of 8-11% depending on the loan to value ratio (LTV), strength of the borrower, property, lender and various other criteria.
While hard money loan rates are higher than conventional multifamily loan rates, hard money require much less documentation and the approvals and funding can be completed in a fraction of time. Multifamily hard money loans are typically for short terms of 1-5 years.