by Adam Smith
you sitting on a pile of cash and fresh out of ways
to increase your wealth even more? Are you wealthy enough
that you have become bored with your job and need something
new in your life to bring the excitement back? If you
answered yes to both of these questions perhaps now
is the time to make a change and try your hand in the
investment property business. Investing in real estate
will offer an extremely challenging but rewarding endeavor.
Depending on your level of available funds for investment,
you may want to strongly consider investing in an apartment
Though many think obtaining apartment financing is difficult,
that is not necessarily the case. So long as you have
substantial capital around you and can bring in a partner
with experience in property management most of the banks
concerns will be resolved. As always, cash is king,
but experience is equally valuable. Thus, if you can
bring both to the table than apartment financing will
be made available to you.
As you are checking out the variety of options available
with apartment financing you should keep a couple of
things in mind. It is important that you can service
the debt on any apartment building loan you might take
out. This may seem like an obvious point, but if you
have not determined your estimated monthly revenues
from rental income for the apartments, it will be extremely
difficult to know if you can service the debt on an
apartment loan. For some reason many new investors fail
to remember this fundamental principle as they are looking
for apartment financing. Rather than concern themselves
with their debt coverage ratio as they should, they
merely look for the apartment loan with the best rates.
Favorable interest rates are important, but if the length
of the loan is really short, each payment will be higher
and thus relatively more difficult to cover with your
rental incomes. Thus you should understand your inflows
of cash before you decide the amount of monthly debt
you will be able to service. Once you determine this
amount you can look for an apartment building loan that
fits your scenario.
It is also important to keep in mind the amount of up
front equity the commercial lender requires to issue
the apartment loan. If the bank really wants your business
then they will do their best to keep the up front equity
as low as possible for you. On the other hand, if a
commercial lender is not really interested in booking
your apartment loan, then they might quote you a high
up front equity amount to scare your business away.
If you should run into such scenario, it is probably
best to look elsewhere. First, you don't want to do
business with a commercial lender that is not willing
to work with you. Rather you need a commercial lender
that really believes in you and will help you out with
consultations and the like should you run into trouble
meeting your apartment loan obligations. Second, you
want to pay as little up front equity as possible. The
less money you have in the project the less risk you
expose yourself to.
The most important thing to remember as you look for
apartment financing is to look around and negotiate
with the lenders. Be forthright with the lenders, and
let them know if someone else is offering a better apartment
loan package. Often times lenders are not willing to
lose business to their competitors and will match their
terms, or even offer better terms than their competitor.
If you play your cards right you will be able to secure
great apartment financing terms and be well on your
way to increasing your wealth while working in an industry
that is both new and exciting to you.
Adam Smith is an informational
author for 10X Marketing. For more information on a
apartment lending please visit SNCLoans.com.