Apartment Finance Document Templates

A thorough amount of due diligence in multifamily investment is essential for a lender to be able to determine an individual's creditworthiness for an apartment loan. There are many underwriting factors to be considered when a multifamily mortgage broker arranges the financing for an apartment property investment. Just a few considerations include the credit history, collateral, and financial state of the individuals behind the loan, historical financials, DSCR, loan ratios, expenses, debt yield, and much more. 

In the interest of saving investors some time, we've put together a shortlist of the most commonly requested documents, complete with downloadable templates, to be used when planning an apartment property acquisition or refinance. 

Borrower Forms and Templates

Personal Financial Statement (PFS)

[Click to Download a PFS (Personal Financial Statement) Template]()

A personal financial statement, or PFS, helps lenders to determine the financial strength of the entity borrowing funds. Lenders and loan products all have varying requirements as to what is acceptable in this regard, but in general, lenders would like to see borrowers with a strong net worth of at least 100% of the loan amount (not including retirement accounts) and often look for a minimum of 10% of the loan amount in liquidity. If a deal has compensating factors, such as lower leverage, or a borrower with significant multifamily experience, these requirements may be more flexible.

Organizational Chart

Click to Download an Organizational Chart Template

An organizational chart can be a short and simple document or an intricately detailed one, depending on the borrowing entity. In a scenario involving a single-asset entity 100% owned by an individual, the chart is more than likely going to be simple. However, if property ownership is divided or tiered through multiple LLCs, trusts, LPs, etc., then what could have been a small organizational chart starts to look more like a convoluted mess. Even so, regardless of how simple or complex an organizational chart is, it provides transparency required by lenders in order to know all of the individuals behind a multifamily loan proposal. This is not only a simple requirement for underwriting, but it also provides useful information for things like anti-money laundering and anti-terrorism industry best practices.

Schedule of Real Estate Owned (SREO)

Click to Download a Schedule of Real Estate Owned (SREO) Template

If an investor or potential borrower currently owns other investment properties, then most lenders will require a Schedule of Real Estate Owned, or SREO, as a necessary supplement to an entity’s PFS. Generally speaking, if a borrower is already invested in real estate, the lender will want to scrutinize the management and performance the investor's portfolio. This also allows them to identify any potential liabilities or risks that may be associated with the investor's current investments.

Property Forms and Templates

Trailing Twelve Months (TTM/T12)

Click to Download a Trailing Twelve Months Financial Statement Template

When underwriting an apartment loan, of the several operating statements that are analyzed, the most important document requested is often the Trailing 12 Month statement sometimes referred to as the Month-by-Month P&L or the much shorter "TTM or"T-12". The TTM is a detailed breakdown of the profit and loss on a monthly basis for each of the 12 months prior to the current month of operation of the target property, and gives a better understanding of the trends and expenses on a month-to-month basis.

Historical Financials

Click to Download a 3-Year Profit & Loss Statement Template

Historical financials for an apartment property generally include the last three-year P&L statement (in addition to a year-to-date P&L) as well as a stabilized budget. These statements allow the lender to assess the property's historical operations and accurately analyze expenses and income for the target property. The 3-year P&L statement also provides a template for completing a commercial property appraisal in order to compare actual income and expenses to market income and expenses. An acceptable 3-Year P&L should demonstrate a breakdown of a property’s income and expenses year-by-year for its most recent 36 months of operations. A stabilized budget for the upcoming 12 months of operation is also often required, and is a part of the P&L template above. A stabilized budget is imperative for almost all property finance transactions, but it is particularly important for properties undergoing any kind of change, such as substantial rehabilitation, renovations, upgrades, and/or a change in property management companies.

Rent Roll

Click to Download a Rent Roll Template

The rent roll is a key financial document that lenders use for evaluating feasibility in apartment properties and multifamily loan transactions. Rent rolls are a breakdown of all current tenants in a target property and often include key data points such as the market rate of the unit that is being rented, what the tenants are actually paying, concessions, late payments, deposits, the type of unit rented, lease start and end dates, and more. All of these details are considered to be crucial in the underwriting and evaluation of an apartment finance transaction.

Lease Expiration Schedule

Click to Download a Lease Expiration Schedule Template

While similar information can be gleaned from a detailed rent roll, a lease expiration schedule is a more detailed breakdown of the expiration dates for leases in the property. It gives lenders an idea of the potential risks that may arise in future years. The lease expiration schedule identifies the risks associated with expiring leases that the property owner will have to contend with, and their effects on the profits and losses of the property. 

Sources-Uses

Click to Download a Sources-Uses Template

One of the most common requests lenders make when reviewing a commercial real estate loan request is the "sources/uses." In multifamily lending, a sources-uses form basically lays out all the sources of funding for the acquisition/ownership of the property (owner equity and first mortgage loan), all of which typically add up to the purchase price, the as-is value, or the total cost of the property acquisition, depending on the type of project being analyzed. The use of funds section is focused on where that money is being allocated, whether towards purchase price, rehab costs, closing costs, escrows, construction costs, loan fees, etc.