Multifamily Loan Underwriting Made Simple

Here are 6 steps to guide you through the process of multifamily loan underwriting so you can feel confident and prepared.

Underwriting is a process that is often seen as much more complex and challenging than it actually is. While some loan types present more obstacles than others, specifically underwriting multifamily loans can be a very straightforward and simple process. Breaking it down step by step and focusing on the essential components of multifamily loan underwriting can help alleviate some of the challenges often experienced.

Getting Started with the Underwriting Process

Make sure you have a plan in place to help you stay on track and remain organized throughout the process. While it is best to complete the underwriting process in order, you may find that you need to revisit earlier stages, which will be much easier if you keep organized.

Once you have established an organization strategy, the first phase of underwriting multifamily loans requires getting very familiar with the money flowing in and out of the property. Examining this piece carefully will help you accurately project post loan costs and cash flows.

Gathering all of the information needed for the underwriting process may seem intimidating, but it is an essential part of ensuring you’ve made accurate predictions, careful conclusions and have strong returns headed your way.

Here are 6 simple steps you can follow to encourage a smooth underwriting process.

Step 1: Estimate your expenses - Anticipate your expenses, including routine and rare, for the entire duration of owning the property.

Step 2: Assess your revenue - Take into account all potential sources of income that could come from the property. You can start by taking a close look at your rent roll.

Step 3: Consider financial variables - Evaluate potential renovation costs, rent adjustments, the occupancy and vacancy rates, and the expected growth rate.

Step 4: Refine your financing - Be sure to account for any debt you’re taking on in order to purchase this property as well as any future refinancing.

Step 5: Analyze everything and review - This is when you take the time to thoroughly look over and review all of the information and details you’ve gathered regarding this deal. Don’t rush this step in the process, as this is the time to catch any potential errors or revisions.

Step 6: Set your price - Your price will be determined by all of the predictions made regarding your property and should reflect your desired rate of return.

Use these steps to guide you through the underwriting process so that you feel confident and prepared when securing your loan.

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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