multifamily finance 101
TRANSCRIPT
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Multifamily Finance 101
By: James Eng
Senior Director Old Capital Lending
Plano, TX
214-300-5035
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3 Questions1. Is the property stabilized (yield play) or distressed (value play)?2. What is your experience with multifamily (5 units and above) real
estate?3. What is your net worth and liquidity?
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1: Is the property stabilized?Stabilized Properties (Yield):• 90% occupancy for 90 Days• No major rehab needed• Clean historical financials
Non-Stabilized (Value Play):• Distressed assets performing
below market• Physical updates or operations
need to be updated• Low occupancy and low NOI
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2: What is your multifamily experience?Experienced Operator:• At least 24 months of
multifamily ownership
New Investor:• No Experience, but a lot of
enthusiasm
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3: What is your net worth and liquidity?Net Worth• Must be equal to or greater than
the loan amount
Liquidity• Minimum of 10% of loan amount in
cash or marketable securities not in retirement accounts
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Loan ScenariosAssuming you meet the net worth and liquidity requirements:Stabilized Property + Experienced Operator= Non-recourse loan (Agency or CMBS)Stabilized Property + New Investor= Recourse loan (bank)Non-stabilized Property + Experienced Operator= Recourse loan (bank)Non-stabilized Property + New Investor= Recourse loan (bank)
Typical Non-Recourse Loans terms:• 75-80% Loan to Cost• 5 or 10 year term• 30 year amortization• No personal guarantee of loan shortfalls
Typical Recourse Loans terms:• 70-75% Loan to Cost• 5 year term• 20 or 25 year amortization• Personally guarantee any loan shortfalls
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James Eng
Senior Director Old Capital Lending
Plano, TX
214-300-5035
-Born and Raised in Houston, TX -Graduated from UT-Austin with a Finance Degree -Completed GE Capital's Finance Management Program -Underwrote $750M in commercial real estate loans for GE Real Estate-Currently helping investors find financing for commercial properties in the Texas market