2021 Apartment Finance Documents, Forms, and Templates
- Apartment Finance Document Templates
- Borrower Forms and Templates
- Personal Financial Statement (PFS)
- Organizational Chart
- Schedule of Real Estate Owned (SREO)
- Property Forms and Templates
- Trailing Twelve Months (TTM/T12)
- Historical Financials
- Rent Roll
- Lease Expiration Schedule
- Sources-Uses
- Related Questions
- Get Financing
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.
Related Questions
What documents are required to apply for an apartment loan in 2021?
In 2021, borrowers will need a significant amount of documentation to apply for an apartment loan, including an appraisal and other required third-party reports. The required documentation and reports generally include:
- Appraisal: An appraisal attempts to denote the current market value of a property. Appraisals are typically required to be conducted by a professional appraiser currently licensed in the area in which the property is located. Appraisers will generally use a combination of methods, including:
- The income approach, which estimates the value of a property based on its income.
- The sales comparison approach, which estimates the value of a property based on recent sales of similar properties nearby.
- The cost approach, which estimates the value of a property based on the estimated cost to rebuild it, plus the value of the land, and minus any depreciation.
- Property Condition Report/Physical Needs Assessment/Engineering Report: This report observes the physical condition of an apartment property to determine when specific components will need to be repaired or replaced. The report is used to calculate required replacement reserves (funds set aside each year for expected future repair costs). These reports can be requested by a variety of apartment lenders, but are more commonly required for lenders originating HUD multifamily and Fannie Mae/Freddie Mac multifamily loans.
- Phase I Environmental Assessment: A Phase I Environmental Assessment (ESA) examines the area of a property for environmental issues, such as contamination, that could pose a threat to current/future residents or the surrounding community. This could possibly escalate to Phase II and Phase III ESAs if issues or evidence of contamination have been found in the initial Phase I assessment. Phase I ESAs are not always required by lenders, but in most cases are.
- Title Report: Like with the purchase of a single-family home, a title report will make sure that there are no legal claims to a property’s title that could supersede your own.
- Property Survey: A property survey records the boundaries of a property, as well as determining any easements and or other title issues that could impact the property’s use or profitability. This is not always a requirement by lenders, especially if a report is available from the past several years, however, it is more commonly required when potential title issues are found or even suspected.
- Seismic Report: Reports generally only required in areas where earthquakes are common, such as Southern California.
- Zoning Report: May sometimes be required when there are potential issues or confusion around the zoning status of a property.
- Appraisal: An appraisal attempts to denote the current market value of a property. Appraisals are typically required to be conducted by a professional appraiser currently licensed in the area in which the property is located. Appraisers will generally use a combination of methods, including:
What forms are needed to secure an apartment loan in 2021?
In 2021, the forms needed to secure an apartment loan include:
- Borrower Forms and Templates
- HUD/FHA Multifamily Documentation
- Apartment Finance Document Templates
These forms and templates can be found on the following websites:
What templates are available to help with apartment loan applications in 2021?
In 2021, there are a variety of templates available to help with apartment loan applications. According to Apartment.Loans, the most commonly requested documents include:
- Credit history
- Collateral
- Financial state of the individuals behind the loan
- Historical financials
- DSCR
- Loan ratios
- Expenses
- Debt yield
Additionally, according to Multifamily.Loans, the following forms and templates are available for download:
- Borrower Forms and Templates
- Financial Analysis
- Loan Application
- Loan Agreement
- Loan Commitment Letter
- Loan Estimate
- Loan Origination Agreement
- Loan Servicing Agreement
- Mortgage Note
- Promissory Note
- Real Estate Purchase Agreement
- Security Agreement
- Title Commitment
- Truth in Lending Disclosure
What are the best strategies for getting approved for an apartment loan in 2021?
The best strategies for getting approved for an apartment loan in 2021 are to have good credit (660+ is typically expected) and between 25-30% of the total loan amount as a down payment. Additionally, the property itself will need to have a debt service coverage ratio or DSCR, of 1.25-1.30x. This means that the building’s income will need to exceed its annual debt service by at least 25-30%. Skin in the game is equally important in most cases, but that does not mean first time investors are automatically overlooked.
Instead of wasting your precious time and energy trying to figure out everything on your own, consider approaching an experienced intermediary, like the ones we have at apartment.loans. At apartment.loans, we do the work for you, utilizing our strong network of banking relationships to have banks compete against each other to give you the best loan possible.
What are the most important factors to consider when applying for an apartment loan in 2021?
When applying for an apartment loan in 2021, the most important factors to consider are credit history, collateral, and financial state of the individuals behind the loan, historical financials, DSCR, loan ratios, expenses, debt yield, and much more. Additionally, borrowers will need to have good credit (660+ is typically expected) and between 25-30% of the total loan amount as a down payment. The property itself will need to have a debt service coverage ratio or DSCR, of 1.25-1.30x. This means that the building’s income will need to exceed its annual debt service by at least 25-30%.
For more information, please refer to the following sources: