It is paramount to have the right materials and mindset when it comes time to purchase or refinance a multifamily community. Connect Media recently caught up with Sloan Stevens, Director at Hunt Real Estate Capital, who provided a list of 11 items to have on hand to ensure the fastest multifamily financing possible. While Sloan specializes in the Small Balance Multifamily sector – properties typically supported with loans in the $1 million to $7.5 million range – these tips should apply to any transaction.

A Clean & Complete Rent Roll

This is the basis for sizing up any financing and ensuring that the property fits within a given loan program. At a minimum, the rent roll should include if a unit is occupied, the rent rate, if payments are current, and when a unit’s lease expires. The more information, the better. The image below portrays a hypothetical property, but I would be very happy if this level of information was presented to me when screening an opportunity.

multifamily financing example

Operating Statements & Trailing 12 (T-12)

These are the income and expense statements for a given property. Along with the rent roll, they help paint a picture of what property performance looks like now, and in the future. We are looking for the year-end statements for the past two years, as well as a T-12, which is a statement for the past trailing 12 months.

Openness to Using New Tech

Hunt is constantly looking to refine and streamline the loan process. In 2018, we launched an online loan application and processing portal called leaponline™. Borrowers used to downloading, printing, signing, scanning and emailing documents are encouraged to try our new loan process. The speed and transparency provided by paying application fees online, e-signing and uploading documents, completing forms with automated guidance, and accessing a real-time due diligence checklist allow for a hassle-free loan experience.

Personal Financial Statements

Small Balance Loan programs typically require that borrowers have a net worth greater than the loan amount, as well as nine months’ worth of principal & interest payments in liquid assets. Note that this can be cumulative if there are multiple key principals on a transaction. Statements verifying these funds are required to keep the loan process moving.

Availability for a Site Visit

This may sound obvious, but you would be surprised. If you are given a list of days for a site visit, try to accommodate the earliest one offered. You do not want something as simple as scheduling a site visit slowing down the process.

For Acquisitions – Purchase & Sale Agreement

This document includes information on the buyer and seller, including contact information and co-signers. It should also list the type of sale, date of agreements, whether or not a deposit was paid, as well as timing on final closing and ownership transfer.

For Refinancing – Cost Basis & Length of Ownership

In addition to the operating statements mentioned earlier, we like to know the whole story of the property under your ownership. The more information, the better (e.g., include details on the scope of capital improvements you have made).

REO Schedule

Hunt and our Agency partners seek to work with borrowers interested in preserving rental housing for the U.S. workforce. A schedule of your real estate owned (REO) would show that you have experience owning and operating quality, like-kind properties. Much like the rent roll, the more information, the better. A good REO will include the property type, purchase date, unit count, ownership structure, and debt outstanding, as well as property financial metrics such as NOI, DSCR, and LTV.

Legal Representation

Determining your legal representative is an important part of the loan process. Working with someone with experience in commercial real estate can help prevent – and quickly solve – any issues that might arise during the transaction.

Insurance Accords

Insurance requirements vary by loan program. The faster a borrower can provide their lender with insurance information, the faster we can coordinate to make sure that your coverage complies with the respective guidelines.

Positive Attitude

The borrower typically controls the flow of information, which in turn impacts the timing and speed of underwriting. Any loan is going to require a fair share of paperwork. You are going to need to provide information on your personal financials. We are going to be requesting a lot of information about your current operations for a refinance. Just remember that Hunt’s goal is to get you the best loan terms possible, as fast as possible. Being responsive and proactive as a borrower goes a long way.

Sloan G. Stevens is a Director in the Birmingham, Alabama office of Hunt Real Estate Capital. A native of Birmingham, Mr. Stevens is a multifamily mortgage banker specializing in the origination of Fannie Mae and Freddie Mac small balance loans (SBL) across the Southeast.