Learning Materials for Apartment Complexes? New to CRE
Love this community, and appreciate the help. I have been a residential investor for a while now and am looking to completely transition into CRE once I liquidate my residential holdings. I aim to purchase one 50+ unit complex. On my team is a knowledgeable commercial broker and real estate CPA for context. Now I think there is a learning curve for me and want to learn/read up before I do my first deal:

1. What are resources for beginners in CRE and/or specific to apartment complexes?

2. For commercial lending($3m+ property price) what is a general checklist I should make sure I have/qualify before I approach lenders?( currently holding 750k cash with 500k sellable assets)

Would appreciate some general advice for this area. Thanks.
[{"id": "g7ep38w", "text": "Check out adventures in real estate for some good excel templates. Textbook-wise, check out Real Estate Finance and Investments by Linneman. It's expensive, but often referenced as the go-to textbook. If you don't want to spend the money, you can find Bruggeman's book in pdf. (http://www.creentrepreneur.com/wp-content/uploads/2017/04/Real-Estate-Finance-and-Investments-14th-Edition-by-William-Brueggeman-Jeffrey-Fisher.pdf)", "replies": [{"id": "g7epj5m", "text": "Thank you", "replies": [{"id": "g7o7zdy", "text": "Good luck OP - I see the PDF is 788 pages long (edition from 2011), and the US edition on Amazon is an eye-watering $202 (2018 Ed.)\n\nWill be taking a stab at it myself, RE is a specialized field with plenty of concepts and it\u2019s own jargon.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g7eqyg0", "text": "CCIM courses are pretty good baseline for financial modeling.", "replies": [], "depth": 1}, {"id": "g7eqzyc", "text": "Edit: As a major caveat, you're going to have a hard time finding a bank to lend to you on a first deal going from SFH to a 50+ unit building.  At that scale, banks are going to want to see significant experience in operating commercial MFH.\n\nWith respect to lending, the first thing to look at is whether you are open to recourse financing (eg; posting a personal guarantee) or non-recourse funding (eg; no personal guarantee).\n\nIn my experience, the best vehicle for lending (for the \"first time\" with something this big) is a local bank, credit union, community bank, etc.  Until you have experience with a given bank, you're likely only going to get recourse funding, so you'll need to personally guarantee the loan.  Rates and terms change over time, but in the current market you're probably looking at 75% LTV, a need to show 12 months of cash in reserve, and the building to meet certain minimum criteria around occupancy, DSCR, etc.  Don't forget that all of your due diligence and closing costs get amplified with larger commercial MFH as well (inspections cost more, environmental screening is mandatory, loan fees go up, etc.). Using your hypothetical $3m building:\n\n* Down - 25% = $750k\n* Reserves - 12mo P&amp;I \\~= $140k (25 year amortization, 4%)\n* Expect you'll spend $50k out of pocket in legal fees, inspections, appraisal, various other loan fees, outside of other closing fees (title, transfer taxes, prepays, etc.)\n* Generally, loan terms are going to look something like 25 year amortization, 5 year term with a balloon at the end, \\~4% in today's market, and a 1-2% prepayment penalty.  Covenants tend to be lightweight; provide the bank with annual business and personal tax returns, building financials, etc.\n\nSo basically, go into it having $1m in cash on hand.  Likely, most banks are going to also require seeing outside income (eg; W2 income) and a current net worth that would support a significant portion of the loan amount given you're signing a personal guarantee.\n\nThe other option, and best case for non-recourse funding, is with \"Agency\" funding (eg; loans that get held by Fannie/Freddie).  In general, rates are better, terms are much better (30 year amortization, longer loan durations = 10+ years instead of 5 years for most \"local\" lenders), but they come at higher transaction costs\n\n* LTV's vary by market, but in major markets you can still get 80% LTV for agency deals\n* At the moment, agency deals require 12+ months of P&amp;I placed into escrow at closing.  They'll be held as reserves until COVID is done...\n* Principals on the loan need to show \\*net worth\\* equal to the loan amount\n* Fannie/Freddie require ownership to show MFH experience of similar size/scale\n* If you're not local to the property, professional property management is required.  Even if you're local, property management may be required if they're not comfortable with your MFH experience to date\n* In exchange for all of this, terms tend to be a bit better:\n   * 30 year amortization is available\n   * Terms tend to be 7/10/12 years instead of 5\n   * Rates around 3.5% (sometimes lower) can be found\n   * The flip side to this is higher loan processing costs up front, and fairly substantial prepayment penalties (if you're not familiar, go look up what yield maintenance penalties are)", "replies": [{"id": "g7ernll", "text": "Best response I have received. Thank you! I believe agency loans are most likely the direction I will go. I know that there are fha 223f loans, etc but how likely is it for me to get one?\n\nAnd for the agency loans, is there any way to increase LTV so I can minimize my down payment. Are 10-15% down payments even possible?", "replies": [{"id": "g7es4is", "text": "I'm not terribly familiar with 223f loans - as I understand it, they require the building in question to have undergone relatively recent (with 3 years?) renovations, and there is a floating schedule of LTV based on the type of project; full market rate, % of affordable units, etc.\n\nFor agency loans, I've not seen anyone offer them at less than 80% LTV.  Even then, for the 80% LTV you pay a penalty in terms of rate, and that's only available in larger markets.  70-75% seems to be more the \"going rate\".  Your best best is to speak to a mortgage broker that does agency business; at the end of the day, there are a relatively small number of banks that actually issue Freddie SBL loans (as an example since that's the best fit from what I've seen for smaller apartment buildings) and a web of mortgage brokers that tie into that network.\n\nWith agency lending, there is an option to add initial interest only years at the front-end of the mortgage.  Last deal I went through it was \\~5bps on the rate for each year of I/O upfront.  For the deal in question, we were looking at 3.5% / 10 year term / 30 year am, went up to 3.65% to do the first 3 years as IO.", "replies": [], "depth": 3}], "depth": 2}, {"id": "g7es1co", "text": "What would be some ways to increase my chances of getting approved for lending given my \u201cnewbie\u201d status in CRe", "replies": [{"id": "g7esk14", "text": "Smaller building and/or smaller loan amount :)\n\nJoking aside, find a reasonable \"in market\" mortgage broker or speak to a few banks in the city you plan to invest in.  Let them know your plans, share your potential targets or if you haven't identified a building yet, the general plan you have.  Most will be pretty direct as to whether they can fund something similar (and you!) or not, as they don't want to waste your time or theirs.\n\nBy way of example; before we invested in a new market we reached out to a few local banks with a general introduction - our real estate investment experience, a summary of our MFH experience specifically, and a general thesis for what we invest in/what we intend to invest in within that market (for us, that's light value-add Class C with poor current operations, and we invest for long-term holds, 10+ years.  Substantially more detail goes into it, but that's the 5 second summary).", "replies": [{"id": "g7et20z", "text": "Agreed completely. I\u2019m focusing solely on properties in my State(TX), a property I\u2019m looking at is in a different city. Would it be best to approach local banks in the city I live in first and build relations with them or go to the city I\u2019m investing in(only 2hr drive). Is a local chase fine or is better lending recieved through actual local community banks. Can these banks provide agency lending options as well besides their own private lending?", "replies": [{"id": "g7f155r", "text": "I'd personally go with local as in the same city.  Likewise, not a branch of a national bank, an actual local community bank.\n\nGenerally they only lend for their own portfolio, not act as brokers for other lenders.\n\nAlternately, I'm a big fan of a quality mortgage broker.  They can be indispensable.", "replies": [], "depth": 5}, {"id": "g7fbb25", "text": "I would also recommend a strong attorney. Lender will like to know your corporate docs are in order. Leases etc. I\u2019m licensed in Texas if you want to chat", "replies": [{"id": "g7fbwfw", "text": "Thanks, will definitely take you up on that when I get sorted", "replies": [{"id": "g7fckdl", "text": "I am the legal contributor to adventuresincre.com too.", "replies": [{"id": "g7fcl9f", "text": "**I found links in your comment that were not hyperlinked:**\n\n* [ACRE.com](https://ACRE.com)\n\n*I did the honors for you.*\n\n***\n\n^[delete](https://www.reddit.com/message/compose?to=%2Fu%2FLinkifyBot&amp;subject=delete%20g7fckdl&amp;message=Click%20the%20send%20button%20to%20delete%20the%20false%20positive.) ^| ^[information](https://np.reddit.com/u/LinkifyBot/comments/gkkf7p) ^| ^&lt;3", "replies": [{"id": "g7fd1l6", "text": "Edited my link thanks", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}, {"id": "g7fmdm4", "text": "Moving down to Texas and might need a CRE attorney. DM me.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "g7fmocz", "text": "Find someone else who will guarantee the loan for you. Usually you pay them a guarantee fee for their risk that is capitalized with the project. About 1-3% of total project costs.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g7g3ner", "text": "We work with a lot of new or newish multifamily investors. I frequently suggest teaming up with a more experienced investor that has some entries on their [Schedule of Real Estate Owned](https://stacksource.com/sreo) to take down your first deal.\n\nIf you don't have a partner, your net worth better be larger than the loan amount, and you need to have plenty of liquidity.", "replies": [], "depth": 1}, {"id": "g7hityh", "text": "We are buying apartments in San Antonio/Austin happy to help with any info you need to get started (shoot me a PM). It\u2019s tough getting your first deal done it\u2019s so much easier the 2nd time around.  Agency non-recourse debt will require experience but it\u2019s your best deal right now.  For a 50 unit I would look at a Freddie SBA loan.  Partner with an experienced operator to get your first deal done so you don\u2019t struggle. I would also recommend looking at larger properties 100+ units and syndicating the project.  50 units is a tough place to be because payroll won\u2019t get you full time staff but it\u2019s a large enough property to keep you extremely busy.", "replies": [{"id": "g7hk5o0", "text": "Thank you! Just Sent a DM", "replies": [], "depth": 2}, {"id": "g7kl0jw", "text": "What size apartments? We\u2019re always looking to JV with good folks who are boots on the ground. If JV isn\u2019t your thing no worries.", "replies": [{"id": "g7or02p", "text": "Hey there! We are looking at 50+ unit apartment complexes that are Class C. We will specialize in Texas as we understand that area. DM me if interested.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g7kkp88", "text": "Spend the money to go to Neal Bawas multifamilyU bootcamp. Supercharged my knowledge.", "replies": [], "depth": 1}]