This is my first post so its an introduction/ question. I have found a great deal. It is three duplexes being sold in one transaction. My question is do I need to obtain a commercial loan since this is over four units or can I still qualify for residential since it is three individual buildings? Also this is my second deal (first one is a live in flip that I am currently in the middle of) so I am also wondering if it is a good idea to expand that rapidly? If my offer is accepted on the duplex I will still have to obtain hard money which will be an uphill battle and I will need some encouragement!
Thanks in advance!
@Ryan Simpson if the three duplexes are being sold in one transaction, you are essentially buying 6 units, which I think would make it a commercial transaction. You can negotiate with the seller to have it split up into 3 transactions, one for each duplex. However, you need to make sure with your mortgage lender that you can close on 3 transactions at once using a residential product on each. Otherwise it would be more prudent to get one commercial loan. As a caution though, you need to get a commercial blanket mortgage if you are buying three separate duplexes. Make sure your lender is aware of that!
That is extremely helpful! Thank you so much
What is your exit strategy for this purchase and do the units need rehab?
The strategy would be similar to a BRRR. All the units are currently rented below market and need quite a bit of work. Ideally I would like to take the rehab one duplex at a time and keep the other tenants in place. Since I would be only doing one duplex at a time, a true BRRR strategy would not work due to the long rehab time frame. Any suggestions on how to handle the financing of the rehab?
Thanks again for everyone's input.