Five units and up
Multifamily
Acquisition and refinance of stabilised and lightly value-add apartment property, five units and above.
Five units is the line. Below it a lender underwrites you; at or above it a lender underwrites the rent roll, and the questions change completely — from what you earn to what the building earns, from your credit score to trailing twelve months of collections.
What this programme covers
- Garden, mid-rise and wrap product; 5 to 300 units
- Stabilised acquisitions, rate-and-term refinances and cash-out at lower leverage
- Trailing 12-month operating statements and a current rent roll, signed and dated, drive the sizing
- Interest-only for the first one to three years on lower-leverage deals
On stabilised multifamily at current spreads, debt service coverage usually binds before loan-to-value does.
Test it on your numbersWhat underwriting actually reads
Trailing twelve
Collections for the last twelve months, month by month, reconciled to the rent roll. A T-12 that disagrees with the rent roll by more than a rounding error restarts the conversation.
Economic vacancy
Physical vacancy plus concessions, bad debt, model units and employee units. Underwriting to physical vacancy alone is how a 1.25× deal becomes a 1.08× deal after closing.
Replacement reserves
A per-unit annual reserve is deducted from NOI before coverage is tested. Older stock carries a larger deduction.
Sponsor and property management
Units owned, units of this type owned, and whether the manager is third-party or in-house.
Who it suits
- Private owners consolidating a small portfolio
- A first institutional-size acquisition
- Refinancing a maturing balloon
- Not this programme: One- to four-unit rental houses, which are underwritten residentially and belong on a different desk.
Illustrative scenarios in this class
- S-01 — illustrative112-unit garden acquisition$12,190,000 · DSCR bindsAt a 1.25× floor the coverage test caps the loan at 66.2% LTV — below the 70% the LTV test would have allowed. Two years of interest-only lifts early cash flow without changing the sizing, because the coverage test was run on the amortising constant.
Questions on this programme
Do you count laundry and parking income?
Yes, at trailing actuals rather than pro-forma, and only where it appears in the operating statements for at least the last six months.
What happens to the balloon?
It is refinanced, the property is sold, or an extension is negotiated. A ten-year term on a thirty-year amortisation retires roughly a fifth of the principal; the rest is still owed on the maturity date.