I need advice on how to get into my first multi-family complex

[Ilya P.]

Hey, there, I'm currently getting approved for a single family loan to convert a large square footage Single family Into a 4 unit, then 5 units apartment building.

cash out refi later and put that cash into a bigger building deal. 

also say a hud multifamily loan requires 10% down and 10% in the bank ( of purchase price ) 

but do i have to do this?

How much of this cash can be taken in loan format? 

I mean can I take a 600k loan to meet a 3 million dollar building's down payment and cash on hand requirements? 

if the building cashflows really well ... it wouldn't be a big deal to use a loan for dp right...

at 10% down for lower income housing

I don't have much money and I think that this is the best way to get multi-family management experience to meet hud loan requirements in the future which Have the lowest Down payment options.

Am I overthinking it?

Is there a way I can really get into Say 20 to 40 unit building other than of course sellar financing. I want to do a straight finance since I find the other options to risky.

[Jason Wray]

Sounds a little confusing because you cannot use any single family loan to convert a home into a 4 unit. If you mean you are using a "Construction loan" to add onto a SFH adding 3 units that could work but you still need a down payment. When you get approved for a home purchase it must be used to buy the home and not as a down payment on any other homes.

You cannot take out a loan to use as a down payment unless you take out a HELOC on your primary home or do a cash out refinance. When you say take out a $600K loan for a $3M building you cannot use a loan as a downpayment. Again unless its from a Heloc or cash out refinance from another property.

If you do not have a commercial loan as of yet and do not own multiple rentals you are not getting approved for a $3M commercial loan. Unless you have 20% and have additional assets for reserves and PITI Reserves, on top of a strong PFS. Plus the building itself must show receivables as a business or in rents to underwrite the NOI of the business, Rent rolls, and occupancy ratio if rented

Have you thought about starting small and simply buying some single family homes or 2-4 units and transition into commercial?  You might already have some real estate the thread did nto mention but if not focus on that first.  Commercial is very tough compared to residential to get into with limited funds/assets.