By Andrew Hanson, Commercial Agent | Goldmark Commercial Real Estate | Fargo, ND
Investing in multi-family real estate is one of the most proven ways to build long-term wealth and generate
income. Whether you are buying your first duplex or expanding into a larger apartment building, one of the major keys to success comes down to financing.
As someone who spent 15 years helping clients secure commercial real estate loans before becoming a commercial agent, I have seen both sides of the process. I know what lenders look for, what investors often overlook, and how to prepare so your financing works for you instead of against you.
If you are ready to buy your first or next multi-family property, here are a few things to keep in mind.
- Start with a Clear Investment Plan
Before talking with a lender, define your investment strategy. Are you looking for steady cash flow, long term appreciation, value-add property, or a mix? The type of property you choose — from a small duplex to a 50-unit complex — should align with your goals, risk tolerance, and time horizon.
Lenders will ask about your investment plan, so the more thought you put into it upfront, the stronger your application will be.
- Know Your Financing Options
The good news is that there are several ways to finance a multi-family property, depending on your experience, down payment, and investment size.
Traditional Bank Loans
Local and regional banks are a great place to start, especially if you already have a banking relationship. These loans typically offer competitive rates, personalized service, and they already know the market.
Commercial or Portfolio Loans
For larger multi-family properties, lenders may use portfolio or balance sheet loans, where they hold the loan instead of selling it on the secondary market. These loans can be flexible but may require a higher level of borrower experience and financial strength.
Private and Partnership Financing
Some investors choose to partner with others or use private equity to fund their deals. This approach can help you scale faster but requires clear agreements and aligned expectations.
- Understand the Key Metrics Lenders Evaluate
Lenders do not just look at the property price; they analyze how the property performs. Here are a few important metrics they use:
- Debt Service Coverage Ratio (DSCR): This measures how much income the property generates compared to the loan payment. A DSCR of 1.25 or higher is often required.
- Loan to Value (LTV): The percentage of the property’s value financed by the loan. Most lenders prefer 75 to 80 percent for investment properties.
- Occupancy and Rent Roll: Lenders review current and historical occupancy rates and rent collections to evaluate stability.
- Borrower Experience and Reserves: Lenders like to see a solid financial history and cash reserves to handle maintenance or vacancies.
Knowing these benchmarks ahead of time helps you position yourself as a prepared and confident borrower.
- Strengthen Your Financial Foundation
If you are just starting out, your personal financial profile matters as much as the property itself. Maintain strong credit, manageable debt levels, and clear documentation of your income and assets.
For experienced investors, lenders will look at the performance of your existing properties, your management structure, and your ability to scale responsibly.
Having a complete and well-organized financial package signals professionalism and increases your likelihood of approval.
- Build Relationships with Local Lenders and Advisors
One of the biggest advantages of investing in a community like Fargo-Moorhead is access to strong local relationships. Lenders, brokers, and investors here know the market and want to see it grow.
At Goldmark Commercial, we work closely with local financial institutions and investors to match clients with the right financing structure for their goals. Whether you are buying a small multi-family building or a larger complex, building those relationships early can make future deals faster and easier.
- Think Long Term
Financing is not just about getting the deal done; it is about setting yourself up for success years down the road. Consider how the loan terms fit your long term plans. Is the rate fixed or variable? Is there a balloon payment or prepayment penalty? Does the loan allow flexibility for refinancing or future improvements?
A smart financing structure should grow with you — giving you stability today and flexibility tomorrow.
Final Thoughts
Financing your first or next multi-family property can feel complex, but with the right preparation and guidance, it becomes an exciting and rewarding step toward building your portfolio.
In the Fargo Moorhead market, strong economic fundamentals, low vacancy rates, and steady population growth make multi-family investing an attractive long term strategy. Whether you are a first time investor or looking to scale, working with experienced professionals who understand both the financing and real estate sides of the deal can make all the difference.
About the Author
Andrew Hanson is a Commercial Agent at Goldmark Commercial Real Estate in Fargo, ND. Before joining Goldmark, Andrew spent 15 years in commercial lending, helping clients finance real estate projects including investment properties, new construction, and business expansions. He specializes in helping clients buy, sell, and lease office, retail, industrial, multi-family, and agricultural properties. Andrew’s background in both financing and real estate investment gives his clients a well-rounded and insightful approach to every deal.