Mortgages & Creative Financing

Financing a Fourplex Real Estate Investment Property

Expertise:
28 Articles Written
I am asked for advice all the time about financing, and particularly financing for multi-unit investment properties. As I give advice, I outline specific goals of the individual investor and the intent of the property. The multi-unit properties I would like to address are fourplexes, triplexes, and duplexes. These multi-unit properties can be financed as [...] View the full article: Financing a Fourplex Real Estate Investment Property on The BiggerPockets Blog. This content is Copyright © 2017 BiggerPockets, Inc. All Rights Reserved.

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    BawldGuy Talking
    Replied about 12 years ago
    Since the average 4-unit property costs over $400K, where are beginning investors getting the 30% down payment? That’s $120,000 not including closing costs. There are so many folks who’d love to invest, but simply don’t have that sort of money. Even a $150K rental home at 30% down requires over $50,000 in cash including closing costs. Where does this money come from, if not their retirement funds? Thanks — your posts are much appreciated.
    BawldGuy Talking
    Replied about 12 years ago
    Forgot to check the ’email comments’ box. Sorry
    free tv
    Replied about 12 years ago
    I am interested in real estate business. I must start soon. I’m just taking some time to get myself ready for the rush.
    Will Barnard
    Replied about 12 years ago
    Multi-family units are the best way to invest particularly right now. Prices are low (which is when you want to be buying) and a good investment can generate tons of cash flow. I love the self-directed IRA investing method and teach this nationwide every month. Although it is true that 30% down min. is required with SDI investments due to non-recourse loan requirements, there are several other creative startegies to use to avoid coming up with large down payments as mentioned in the post. I have 4-plex units available (NEW) in TX which cash flow and I can show investors how to get in with 10% down and sometimes less! I also have great duplex units (new) that cash flow $400 per month with only a $15k investment and others with 100% financing. . Keep up with the great pots!
    Jalonni Diggs
    Replied over 6 years ago
    I was wondering if you could let me know how you were able to get 10% down on your 4-plex and duplexes?
    Bernard Glincosky
    Replied over 1 year ago
    Thanks Will!
    Will Barnard
    Replied about 12 years ago
    Multi-family units are the best way to invest particularly right now. Prices are low (which is when you want to be buying) and a good investment can generate tons of cash flow. I love the self-directed IRA investing method and teach this nationwide every month. Although it is true that 30% down min. is required with SDI investments due to non-recourse loan requirements, there are several other creative startegies to use to avoid coming up with large down payments as mentioned in the post. I have 4-plex units available (NEW) in TX which cash flow and I can show investors how to get in with 10% down and sometimes less! I also have great duplex units (new) that cash flow $400 per month with only a $15k investment and others with 100% financing. . Keep up with the great pots!
    Will Barnard
    Replied about 12 years ago
    Multi-family units are the best way to invest particularly right now. Prices are low (which is when you want to be buying) and a good investment can generate tons of cash flow. I love the self-directed IRA investing method and teach this nationwide every month. Although it is true that 30% down min. is required with SDI investments due to non-recourse loan requirements, there are several other creative startegies to use to avoid coming up with large down payments as mentioned in the post. I have 4-plex units available (NEW) in TX which cash flow and I can show investors how to get in with 10% down and sometimes less! I also have great duplex units (new) that cash flow $400 per month with only a $15k investment and others with 100% financing. . Keep up with the great pots! Reply Report comment
    Ray Randall
    Replied about 12 years ago
    Sometimes investors stumble when making investment decisions. Every investment option requires information, discernment, and wisdom. Current events demand the keen wit that avoids a misstep, yet acts boldly when the circumstance and the opportunity present themselves. Real estate, when resources permit, makes sense.
    investment property
    Replied about 12 years ago
    it gives a great information and wisdom about the multi unit investment properties and the way the goal is reached in this task.and also you can gather the information about down payment and self-employment.
    maxine
    Replied about 12 years ago
    For those of you who are interested in getting started below $400,000 (which is a ridiculous average–lovely, yes, but ridiculous nonetheless), I would suggest one of two options: 1) Low-income areas (trade-offs occur, of course), 2) Talk to someone who will offer seller financing. I am currently selling a 4-unit in Amherst, NY (an upscale suburb of Buffalo, NY) for much less than $400,000, and I only require 10% down and I finance the rest. It is easy, but have a good lawyer who will draw up the papers for you. Good luck investing.
    Jack
    Replied about 12 years ago
    this is an interesting topic, i wonder if or how things have changed w/the recent real estate down turn. Is now a great time to invest in Forplex Real Estate? I’d wanna wait to see just how things turn out
    Lilah
    Replied about 12 years ago
    maybe it would be a great idea to invest in foreclosed fixer uppers this time. I’m sure you can get great deals on this…. THere is a great game called Flip That House Real Estate Cashflow Game. While it’s about flipping homes, i’m sure it can also teach pple about flipping duplexes or foreplexes… fact of the matter is there are probably great deals out there if you wanna look.
    Susan Lassiter-Lyons
    Replied almost 12 years ago
    I think most of us can agree that residential multiunits are hot right now. ESPECIALLY because of the market turndown. I like them because of cash flow and as a hedge against vacancy losses. If I have a single family home and someone moves I have 100% vacancy. If I have a 4-unit and someone moves out I have 25% vacancy. The issue is always the downpayment for investors. We are taught to use LEVERAGE in investing. And who wants to tie up 30% of their own cash in one property? We teach our clients to buy distressed multiunits using a private rehab loan. If you get a loan for 70% of the ARV, then your deal should be good enough to roll in 100% of the purchase price, 100% of the repairs and 100% of the closing costs. Once the work is complete, do a rate and term refi into permanent financing. Voila – a 100% deal. And yes, still available and happening in 2008!
    Investment Property - Cape Cod
    Replied almost 12 years ago
    Susan, That is exactly what I used to teach investors to do when I was doing loans. Find a distressed multi-unit and get a hard money loan….fix it up and refi into a normal loan 6 months down the road with a LTV they can afford or one where they will need 0 additional down payment. Multi-units in Cape Cod are going like hot cakes right now.
    Investment Property - Cape Cod
    Replied almost 12 years ago
    Susan, That is exactly what I used to teach investors to do when I was doing loans. Find a distressed multi-unit and get a hard money loan….fix it up and refi into a normal loan 6 months down the road with a LTV they can afford or one where they will need 0 additional down payment. Multi-units in Cape Cod are going like hot cakes right now.
    Donald
    Replied almost 11 years ago
    Mr. Schuricht Fourplex sounds great but what advise could you give to one that been through a divorce,left with “BIG” debt problem, bad credit and simple no money to invest in real estate at this moment? What programs are available? Sincerely, Don
    Dennis
    Replied over 10 years ago
    The premise of the above article is a good one, triplexes and duplexes are my main investment vehicle. But there is one glaring error. I have an 829 credit score, 30% or more to put down (I could pay all cash), my track record of management is impeccable (and profitable). The error? I have not found a lender who will finance any investment property with conventional terms, i.e. 15 year, fixed rated of interest. Currently I am paying 7 3/4% until 2013 and then who knows? If I could get a fixed rate, for 15 years I would retire from my trade (contracting) and go on a buying binge.
    Dennis
    Replied over 10 years ago
    The premise of the above article is a good one, triplexes and duplexes are my main investment vehicle. But there is one glaring error. I have an 829 credit score, 30% or more to put down (I could pay all cash), my track record of management is impeccable (and profitable). The error? I have not found a lender who will finance any investment property with conventional terms, i.e. 15 year, fixed rated of interest. Currently I am paying 7 3/4% until 2013 and then who knows? If I could get a fixed rate, for 15 years I would retire from my trade (contracting) and go on a buying binge.
    Dennis
    Replied over 10 years ago
    The premise of the above article is a good one, triplexes and duplexes are my main investment vehicle. But there is one glaring error. I have an 829 credit score, 30% or more to put down (I could pay all cash), my track record of management is impeccable (and profitable). The error? I have not found a lender who will finance any investment property with conventional terms, i.e. 15 year, fixed rated of interest. Currently I am paying 7 3/4% until 2013 and then who knows? If I could get a fixed rate, for 15 years I would retire from my trade (contracting) and go on a buying binge.
    mr karnataka
    Replied over 10 years ago
    Troy……I do agree with Dennis, eventhough the 4plex loans falls under housing loan it has to be owner occupied to avail the good interest rates. For investment properties the loan rates are different and once it’s under LLC you know the rest…….do you have any recommendations on this?
    mr karnataka
    Replied over 10 years ago
    Troy……I do agree with Dennis, eventhough the 4plex loans falls under housing loan it has to be owner occupied to avail the good interest rates. For investment properties the loan rates are different and once it’s under LLC you know the rest…….do you have any recommendations on this? Reply Report comment
    mr karnataka
    Replied over 10 years ago
    Troy……I do agree with Dennis, eventhough the 4plex loans falls under housing loan it has to be owner occupied to avail the good interest rates. For investment properties the loan rates are different and once it’s under LLC you know the rest…….do you have any recommendations on this?
    Randy Whitman
    Replied almost 8 years ago
    The guidelines have change somewhat since 2008, but with real estate cycles , they may return 10 or 15 yrs later once enough lawmakers are swayed and / or forget about the collapse of subpar underwriting and approvals. Some lenders want you to qualify without the rental income which is ridiculous since that is the objective of buying the “income property”. Reply Report comment
    Randy Whitman
    Replied almost 8 years ago
    The guidelines have change somewhat since 2008, but with real estate cycles , they may return 10 or 15 yrs later once enough lawmakers are swayed and / or forget about the collapse of subpar underwriting and approvals. Some lenders want you to qualify without the rental income which is ridiculous since that is the objective of buying the “income property”.
    Joe Luciano
    Replied about 6 years ago
    I’d love to see an update to this article. What are banks allowing now?
    Joe Luciano
    Replied about 6 years ago
    I’d love to see an update to this article. What are banks allowing now?
    Chris
    Replied about 6 years ago
    you can finance in some areas for 5% down at the current rate (4.625%) if you want. Of course you can make money from month 1 if you just buy it outright, but its a good entry into investing and usually gives you a free place to live if you live in one unit.
    Thomas Usher from Houston, Texas
    Replied about 5 years ago
    Does anyone know the best places to look (websites) in order to find these type of homes in Houston, TX?
    Kerry Crandell Investor from Denver, Colorado
    Replied about 5 years ago
    I’m really interested in finding and buying a duplex-fourplex in the near future. I live in Denver, but really open to buying in other places (in my opinion- our market feels rather frothy right now) I have separate buckets of money (meaning self directed IRA, large HELOC, and cash savings) I am really hoping to use my $25-40K IRA money for this type of investment…but not sure where to start and if it is enough. ?? Is there someone on this wonderful resource that knows how to gain more information on how to accomplish buying an income property with different cash reserves?
    Hillary Wright from Fort Lauderdale, Florida
    Replied almost 2 years ago
    Subscribing to this thread.