Apartment Building Loans in San Francisco, California

So, you are seeking an apartment building loan in San Francisco, California. If you are a newcomer to the commercial income property game, it would be highly beneficial to you to engage the services of an attorney who specializes in real estate. Such a professional will be able to help you with such things as an Offer of Purchase, which is slanted to the buyers’ advantage as compared to a Sales Agreement, which is slanted toward the seller. It would also be to your advantage to hire an accountant to review the tax implication of an apartment building loan in San Francisco, California.

Every investor and every situation is different and therefore may require a different strategy when it comes to financing an investment property. How long you plan to own your apartment building, your exit strategy, current interest rate environments and your personal comfort level all play a part as to what type of apartment building loan in San Francisco, California, that makes the most sense to you.

When we talk about the purchase of an apartment building, you need to know the meaning of the term “cap rate”. It stands for capitalization rate. It refers to how long it will take to get your money back. So, a cap rate that is too low means that you are paying too much for the property. A “9 cap rate” (.09) is a number considered fair and workable by many lenders when loaning on an apartment building. Occasionally, you may be able to go as low as an 8.5 cap rate on apartment buildings. This is considered an exception, not the rule.

You will also need to know the meaning of loan-to-value (LTV). It means that the commercial property lender will loan a percentage of the fair value of the property to you so that you can buy your apartment building. A LTV of 80% means that you will have to put up 20% of your own money as a down payment. The “V” in LTV stands for value. The lender, using a professional appraisal as their basis, will place a value on the property. Neither the buyer nor the seller has a say in what value the lender puts on the property.

As an investor, you need to avoid the pitfalls of overpriced income property. The buyer may tell you that you can increase the monthly rent. He just hasn’t had the time to do it. But you can with very little effort. You can also increase the occupancy rate if you advertise more. The present owner has been distracted by some other problem to take care of this issue. The seller is basing his asking price on factors that do not exist. A lender will not loan you money based on what might happen. If you pay the higher price, you will have to make up the difference in what the lender will give you with cash from your pocket.

Once you have found the right property, it is time to apply for your apartment building loan in San Francisco, California. You will need to find the right commercial loan. Some of the types of commercial loans are; fixed rate and adjustable rate loans, bridge loans, interest only loans and balloon payment loans. It will take about 120 days for the loan to be completed. Some lenders will tell you that you can get the process done in 45 to 60 days, but this is unrealistic. From the time you submit your completed packet; it will be at least four months before you are the owner of the apartment building of your dreams.