Large Multi-Unit property financing

4 Replies

I have owned rentals and flipped a few houses, but when it comes to large multi-unit properties I have zero experience.  What should I expect the process to be like if I were to buy a multi-unit property for example at $500K?  Would 20% down be sufficient?  If I used $100K from the equity in my home, is that allowed?  How long does it normally take to close?  I have also heard that it is possible to get financing to reimburse the down payment, is that true?

Thank you!

Joe

What's your definition of a large multi-family? I ask because I just looked and in the Phoenix market right now you generally won't break past 40 units without at least a $4m+ price-tag.

With this being the case I would suggest (feel free to get as creative as you like this is just a single suggestion) to keep buying small until you can wrap your portfolio into a 1031 to finance a larger property. While at the same time looking for a group that already invest in what you want and trying to break ground with them.

@Joe Kelepolo As @Account Closed pointed out, you need to define your ideal property size. Maybe the best way for you is:

1) to determine the property size and approximate price per unit in the identified area

2) reach out to a commercial mortgage lender (or several) and find out how much you'd need to qualify/obtain a loan

3) read a few books on MFH investing. Start with Steven Berges and David Lindahl books.

Best of luck!

Originally posted by @Joe Kelepolo :

I have owned rentals and flipped a few houses, but when it comes to large multi-unit properties I have zero experience.  What should I expect the process to be like if I were to buy a multi-unit property for example at $500K?  Would 20% down be sufficient?  If I used $100K from the equity in my home, is that allowed?  How long does it normally take to close?  I have also heard that it is possible to get financing to reimburse the down payment, is that true?

Thank you!

Joe

 Hey Joe

To answer your question about equity in your home, it's going to depend on the type of loan you get.  it's also going to depend on whether you have to qualify personally for the loan or not and how much other debt you have.  Some lenders don't care about anything and look at the borrower's credit, the property (condition and cash flow) and roll on.  Others look for a needle in the haystack to deny the loan.  It depends on the lender, your qualifications and your tolerance.

Hope that answers your question (it probably just created more)

Best of luck

Stephanie