Explore the various types of loans available to multifamily investors and learn about their benefits, terms, and ideal usage scenarios.
Agency loans are loans that are backed by government-sponsored enterprises such as Fannie Mae and Freddie Mac.
These loans offer attractive terms and low interest rates, making them a popular choice for multifamily investors.
One of the main benefits of agency loans is their long repayment terms, which can range from 10 to 30 years.
Agency loans are best suited for investors who are looking for stable, long-term financing options.
Bank loans are offered by traditional banks and financial institutions.
These loans are often more flexible than agency loans and can be tailored to meet the specific needs of the investor.
Bank loans typically have shorter repayment terms, ranging from 5 to 15 years.
One of the main advantages of bank loans is their speed of approval, as banks are able to process loan applications quickly.
Bank loans are a suitable option for investors who require fast financing or have unique circumstances that may not meet the criteria of agency loans.
CMBS loans, or Commercial Mortgage-Backed Securities loans, are a type of financing where multiple loans are pooled together and sold as bonds to investors.
These loans are often used for large commercial properties and offer competitive interest rates.
CMBS loans have fixed repayment terms, usually ranging from 5 to 10 years.
One of the benefits of CMBS loans is their non-recourse nature, which means that the borrower is not personally liable for repayment if the property defaults.
CMBS loans are suitable for investors who are looking for financing options for large commercial properties.
Bridge loans are short-term loans that are used to bridge the gap between the purchase of a new property and the sale of an existing property.
These loans provide temporary financing and are typically repaid within 6 months to 3 years.
Bridge loans often have higher interest rates and fees compared to other loan types.
One of the main benefits of bridge loans is their quick approval process, which allows investors to secure financing in a short amount of time.
Bridge loans are ideal for investors who need immediate funding for a property purchase or renovation.
Life company loans are loans that are provided by life insurance companies.
These loans offer competitive interest rates and flexible terms.
Life company loans typically have longer repayment terms, ranging from 10 to 30 years.
One of the advantages of life company loans is their high loan-to-value ratios, which can reach up to 80%.
Life company loans are suitable for investors who are looking for long-term financing options with favorable terms.