In today's capital markets banks are lending money, however, since the election we have seen interest rates increase over .75 bps. Below are some tips to help you navigate through the loan process.
Borrower
As a borrower, you need to have the following items ready:
- An accurate personal financial statement
- 2-3 years of recent tax returns
- 5-10% of requested loan amount for cash reserves at close of escrow
- Current rent roll
- Profit and Loss Statements: YTD, 2015 & 2014
- Up-to-date maintenance schedule
- Vacancies filled before start of transaction
- Show strong rent collections for the past 6 months
Iconic Investments is happy to provide you with referrals for apartment loan brokers in Los Angeles.
Selecting Loan Program
- Fixed Terms vs. Adjustable Rate Mortgages: Fixed Rate Mortgages are a good choice right now as interest rates are expected to continue to rise over the next few years. Apartment building loans are offered with fix terms of 3, 5, 7 & 10 years.
- Interest Rate: Lower interest rates are always more favorable, however, lower rates come with more stringent terms. Depending on your investment strategy, it may be wise to take a slightly higher interest rate with shorter pre-payment penalty periods
- Pre-Payment Penalty: What is your investment timeline? Always choose a loan program that has the pre-payment term for your hold strategy.
Mortgage Broker
- As a borrower, it is extremely important that you work with an active mortgage broker that knows the lending market, and has lending contacts.
- Always be sure to ask your mortgage broker questions about your concerns related to the loan.
- Know, that if a mortgage broker is not provided important financial or property information in a timely manor, the best rates can terms can decrease significantly.
- Understand the loan process take longer today than it did 12 months ago.
Iconic Investments
16530 Ventura Blvd
Suite #409
Encino, CA 91436
T: 747-444-3303
E: info@iconicinv.com
W: www.iconicinv.com