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Alternate Lending for Multifamily Investors

Today we talk with Ken Avalos, VP of Electra Capital, about alternative lending with a focus on multifamily financing solutions. Alternative lending is a great option when traditional lenders are unable to meet an investor’s needs. The benefit of an alternate loan is more leverage (which means you put in less capital), speed, and the flexibility and creativity to work around odd structures and difficult issues. Depending on your situation, this can potentially allow you a greater rate of return.

Most investors use traditional lenders like Fannie and Freddie, or use a traditional community bank – all of which typically offers low cost and long term fixed rate financing. However, these traditional lenders will usually at best give you 65%-70% leverage, and their underwriting criteria is fairly strict. And in today’s world of 3%-5% cap rates, it’s hard to generate a decent internal rate of return.