What is the most important factor in getting a loan or mortgage for your apartment building? Rental income.
This means before you even start to look for a lender, you need to get all your income figures, data and paperwork together.
4 important factors that a bank will consider before approving your loan:
- Rental income that can support the loan payment
- Properly executed leases
- An occupancy rate consistent with the market you are in
- Debt service coverage ratio of 1.25
It is important that your rental income can support the payments on the apartment building loan you are requesting. Determining your estimated monthly revenues from rental income gives you an idea of the size of debt you can manage.
If you are looking to purchase an apartment building, this process also helps you to determine if the property is a good investment. In this case, be sure to check the tenant income and occupancy rate and compare these figures to other similar apartment buildings in the local area.
Any questions? APEX is always here to help. Call us at (800) 262-2739 to learn more.