Most long-term apartment loans want 90% occupancy or better. If your building sits in the high 80s and still cash flows, you don't have to settle for another bridge loan.
Banks and agency lenders draw a hard line at 90% occupancy. Below it, the usual answer is another bridge loan: a higher rate, a short clock, and the same problem in 18 months. For a building that's cash flowing at 86% or 88%, that's paying bridge rates on a building that doesn't need a bridge.
Some interest-only programs consider buildings in the high 80s, as long as the building is stabilized and the income covers the payment. Because the loan qualifies on the interest-only payment, the lower occupancy hurts the loan amount less than it would on an amortizing loan, and you get a fixed rate for years instead of months.
On cash-flowing apartment buildings in the high 80s, loan amounts typically range from $500,000 to $20 million and above. Maximum LTV is typically 75%.
These are typical ranges, not a quote. Your rate and loan amount depend on the property, your credit, and the market.
These are typical terms. Yours depend on the building, the market, occupancy, and the term you choose.
Occupancy climbing under a new manager, not there yet.
A few units offline at any time for turns and upgrades.
College towns and military markets where occupancy moves with the calendar.
A competing building opened and occupancy dipped while rents held.
The building pays its bills, it just isn't at 90% yet.
Lock a fixed rate instead of rolling short-term debt.
The building: 60 units, 87% occupied after a management change, about $470,000 of net operating income, appraised near $7 million.
The problem: A bank and an agency lender both wanted 90% or better for 90 days straight. The other option on the table was a second bridge loan with another short maturity.
The loan: A 5 year fixed, interest-only, at about 70% of value: roughly $4.85 million.
The result: The bridge paid off, a fixed payment for five years, and room for occupancy to climb without another refinance.
Illustrative figures, rounded. Your terms depend on the building, the market, and the loan.
For owners whose building cash flows today, even if the occupancy number doesn't impress a bank yet.
Swap a short clock and a high rate for years of fixed-rate debt.
Stabilized and cash flowing, a little short of 90%.
Qualifying on the interest-only payment softens the effect of lower occupancy on the loan amount.
Lock the loan now and let the building catch up.
What you own, what's owed on it, and what you want the loan to do. A rent roll and T-12 are all it takes to start.
The loan amount, the structure, and the cash to or from you at closing, before you pay for an appraisal.
Appraisal, environmental, title, and insurance get ordered and kept on schedule. You always know what's left before closing.
Loan documents signed, the old loan paid off, and the rest wired to you.
Send the rent roll and T-12, and we'll come back with terms.
