Multifamily Finance 101

By: James Eng

Senior Director Old Capital Lending

Plano, TX

jeng@oldcapitallending.com

214-300-5035

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?

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

2: What is your multifamily experience?Experienced Operator:• At least 24 months of

multifamily ownership

New Investor:• No Experience, but a lot of

enthusiasm

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

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

James Eng

Senior Director Old Capital Lending

Plano, TX

jeng@oldcapitallending.com

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