• What is the percentage of units in the building that are owner occupied vs. non-owner occupied?
• Is there any on-going litigation?
• Is there any retail space in the building or any additional "mixed use" for the space?
• How many stories (over 4 is considered a "high rise")?
• Is this new construction? If yes, what percentage of units have been sold? Are the common areas completed?
• Does each unit have it's own "assessor's parcel number"?
• Is there an Arbitration Agreement (if 10 units or less)?
• Are there closed comparable sales within the building?
• Is there a Home Owners' Association? Are there adequate reserves?
• Is it a condo conversion?
Investment Property: Defined by lenders as anything over 4 units. Lenders look primarily at the current income and historical expenses of the building. The income and expenses of the building will be used to determine the maximum loan percentage that the lender will loan based on their financial models. In theory, if a building has high rents relative to the purchase price (i.e. a low "gross rent multiplier") lenders could agree to an 80% loan; however, typically, the maximum loan amount will be approx. 65-70% of the purchase price.
For 1-4 unit properties, lenders look primarily at the buyers income plus the income of the property. The maximum loan amount for 3-4 units is generally 80%, however, there are a couple of lenders who will lend 90-95%. For 1-2 units, it's common
for lenders to go up to 90 or even 100%.
