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Need help with trying to get Mortgage for a 8 unit apartment block

billybonks

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I am trying to buy an apartment block .
This is where I sit - I have 2 rentals positive cash flow of $600.00
1. mgt of 72 K
2. mgt 175K

I live in my residence in fort mcmurray. mgt payments of $3K, but soon will be able to get roomates that will total $2700.00
Mgt $ 555 K
salary is $85,000.00

I remember reading something in Don`s book about buying commercial buildings and that they are possibly easier to get a mortgage. Depending on the percent of vacant ratio to rental in your units.

In a nut shell I am trying to figure out how is it possible for someone tlike me to buy a apartment block, that is say 600K to 1 million or higher, who only makes a salary of 85K.

Are ther any in`s and out`s I should consider or look out for?
 
When financing multi-family units, qualification is more dependent on the income/condition of the building than your credit etc. Talk to a good commercial mortgage broker and they will outline all of your options.

Give George at Montrose Mortgage in Edmonton a call. I don`t have his number on hand, but you should be able to find it online.
 
QUOTE (billybonks @ May 11 2009, 01:44 AM)
...



In a nut shell I am trying to figure out how is it possible for someone tlike me to buy a apartment block, that is say 600K to 1 million or higher, ...


read this article here that talks about how banks underwrite an apartment building .. which is essentially INdependent of your income !



http://myreinspace.com/rein_members_only1/Members-Only_Discussion/81-10996-Multi-Family_Primer_-_May_2009_Issue.html (or buy the May edition of the Canadian Real Estate Magazine)



Wheer is teh building ?

What is the rent roll ?

What is the price ?

I can give you some rough guidelines / results then !



Most banks also want to see a personal net worth of about 25% of teh mortgage. So, if the mortgage is $600,000 then want to see $150,000 in networth.
 
QUOTE (thomasbeyer2000 @ May 11 2009, 09:50 AM)
read this article here that talks about how banks underwrite an apartment building .. which is essentially INdependent of your income !



http://myreinspace.com/rein_members_only1/Members-Only_Discussion/81-10996-Multi-Family_Primer_-_May_2009_Issue.html (or buy the May edition of the Canadian Real Estate Magazine)



Wheer is teh building ?

What is the rent roll ?

What is the price ?

I can give you some rough guidelines / results then !



Most banks also want to see a personal net worth of about 25% of teh mortgage. So, if the mortgage is $600,000 then want to see $150,000 in networth.




Hi Thomas, you did not mention employment income. did you forget or is a net worth of 25% enough in the case of an apartment building?

Also, can net worth be in RE equity rather than cash (well, I'm assuming yes). Thanks.
 
QUOTE (investmart @ May 11 2009, 08:00 PM) Hi Thomas, you did not mention employment income. did you forget or is a net worth of 25% enough in the case of an apartment building?
Also, can net worth be in RE equity rather than cash (well, I`m assuming yes). Thanks.
indeed if you are a rich but unemployed bum you can buy an apartment building .. as income is not required .. the building qualifies .. not you .. although of course the bank has the right to refuse anyone at their sole and unfettered discretion !

and yes, networth includes shares, equity in your home, or rental properties ..
 
QUOTE (thomasbeyer2000 @ May 11 2009, 08:26 PM) indeed if you are a rich but unemployed bum you can buy an apartment building .. as income is not required .. the building qualifies .. not you .. although of course the bank has the right to refuse anyone at their sole and unfettered discretion !

and yes, networth includes shares, equity in your home, or rental properties ..

If the bank approves you based on net worth and not income in the case of apartment buildings, does it mean the down payment required also does not depend on income but is rather standard for apt buildings? (i.e. 15%)
If the answer is no then why are you saying you can have your net worth in RE equity and not available cash? if you need like 35% down without employment income then RE equity of 25% of the mortgage is not enough to make it happpen but rather cash is required.

just trying to understand this interesting topic of apt buildings better.

Lastly, Having 150K equity (to qualify for the 600K apt building mortgage in your example) is not exactly rich Thomas. Thought you know that


Cheers.
 
QUOTE (investmart @ May 11 2009, 10:00 PM) If the bank approves you based on net worth and not income in the case of apartment buildings, does it mean the down payment required also does not depend on income but is rather standard for apt buildings? (i.e. 15%)
..
banks make their own rules in commercial .. as a guideline they want the borrower to have 25% of the mortgage amount in personal equity (cash, bonds, stocks, RRSP, equity in other assets such as RE ..)

Commercial underwriting differs SIGNIFICANTLY from personal properties .. i.e. the building is king .. the operator is queen ..

Once the building qualifies they will look at the operator / owner .. and they may usually allow 15% or 20% or 25% down if the DCR allows it .. but may then see an unemployed operator and then might adjust that upwards to 25% or 30% or 35% at their sole and unfettered discretion ..

Remember the golden rule: He who has the gold makes the rules !
 
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