Apartment building loans in Massachusetts: rates, terms, and who to call

If you are buying or refinancing an apartment building in Massachusetts, the loan will most likely come from a community bank, a savings bank, or a credit union, and it will look roughly like this:

• A five-year fixed rate, sometimes seven or ten, priced off Treasury or FHLB rates
• A 25 or 30 year amortization with a balloon at the end of the term
• 70 to 75 percent of the appraised value, capped by the building's income
• A personal guarantee, and usually the operating account moving to the lender

What lenders ask for. A current rent roll, two years of operating statements, your purchase agreement or existing note, and a personal financial statement. Buildings held in an LLC are normal and expected.

What actually moves your rate. Not your negotiating. The building's debt service coverage, the loan size, the town, and how much the lender wants your deposit relationship. Two banks can quote the same building half a point apart in the same week because one of them is under its multifamily concentration limit and the other is over it.

That is the reason to shop it. No single bank's quote tells you what the market is. We keep a current file on which Massachusetts banks, credit unions, and private lenders are actively writing 5 to 50 unit buildings, and we place each loan with the ones that want it now. Send us your building and we will tell you what it supports.