First Property (4plex)

9 Replies

Hey guys, I'm all nerves so tell me everything's going to be fine please. I just got the ball rolling on a 4plex. Assuming the numbers all check out and the inspector doesn't find anything deal breaking I have some questions. 

1) I don't live in the state I'm buying in. Do I need to occupy one unit to qualify for a conventional loan, or should I rent all four and pay the higher interest? Moving there isn't a problem.

2) I'm trying to do everything over the phone. The agent I spoke to is an investor and tells me we'll make it work but is there anything I should prepare for?

3) Do I need a lawyer before signing anything?

4) Any tips on anything?

5) I freakin' hope this works out. 

@Benjamin Parker , I would say it`s normal to have nerves after all you are spending money and hoping you are not getting into a bad deal. Relax and focus on the task at hand. You already have the ball rolling so I guess that you need to hope that you bought well (equity in the deal) and having a very capable boots on the ground is the most critical factor if the whole thing is going to work.

1. I don`t think you need to occupy the property to qualify for a conventional loan but I may be wrong. Frankly at this stage this is information you should know so you don`t get surprised.

2. I would advise if you could to be on ground to be there and shepherd the process along. Remember in real estate investing if you do the heavy lifting upfront, you can afford to rest easier later. It also depends on your boots on the ground team and how trustworthy and capable your agent is.

3. I don`t  have any insight about needing a lawyer but you may need to ask your agent about that and also ask them to inform you about the process and tell you all the steps and processes involved like needing a lawyer and what not.

4. The only tip I would give you is to relax and take a deep breath, consult more people ( which you are doing right here on BP) and keep running the numbers.

I hope it works out and am rooting for you. Best of luck

Hey guys, I'm all nerves so tell me everything's going to be fine please. I just got the ball rolling on a 4plex. Assuming the numbers all check out and the inspector doesn't find anything deal breaking I have some questions.

1) I don't live in the state I'm buying in. Do I need to occupy one unit to qualify for a conventional loan, or should I rent all four and pay the higher interest? Moving there isn't a problem.-Your financing options become easier/cheaper with owner occupied. However, be prepared with quite a bit of push back from out of state lenders regardless. You can get through it if you are financially prepared.

2) I'm trying to do everything over the phone. The agent I spoke to is an investor and tells me we'll make it work but is there anything I should prepare for?- Read through the forums and find a due diligence checklist from offer to close.

3) Do I need a lawyer before signing anything?- You could, your agent/broker should be POC for most.

4) Any tips on anything?-Cross your tee's and dot your I's. Look at point 2

5) I freakin' hope this works out.-You'll be fine. Feel free to share more details of the deal in your thread. Free free to PM me with any other questions/concerns

    Down payment is the biggest difference in owner occupied or not. You can do a 5% down for an owner occupied conventional loan (will pay PMI if under 20% down).

    You will have to do a 20% down (or 25% for best rate) for non owner occupied. 

    ) I don't live in the state I'm buying in. Do I need to occupy one unit to qualify for a conventional loan, or should I rent all four and pay the higher interest? Investment property loans are more expensive than owner-occupied loans. Conventional loans probably won't have that owner-occupancy requirement, unlike say, an FHA loan. I believe FHA loans is popular with house hackers.

    2) I'm trying to do everything over the phone. The agent I spoke to is an investor and tells me we'll make it work but is there anything I should prepare for? Do your due diligence as others have mentioned.

    3) Do I need a lawyer before signing anything? You probably can, but talk to your agent. 

    4) Any tips on anything? Do your own research. 

    5) I freakin' hope this works out. Keep us updated! 

    More info on property: $115,000 - built in mid 60's. All 4 units 1 bed, 1 bath. Waiting on rent rolls but lowest I've seen in the area is $495. All new roof, siding, windows, paint this year. Interior is very basic. Not sure if separately metered but I'll do that if necessary. 


    Talking to a broker tomorrow and have all my tax records, pay stubs, bank statements and IRA/CD statements in a folder on my phone. Credit score is good but not excellent (724).

    I found some due diligence lists I'll ask my agent about tomorrow. 

    25% down is fine with me. I'm prepared to buy outright in cash but really hope I won't have to. 

    You guys are awesome.

    @Benjamin Parker awesome. Yes get rent rolls and a cheat sheet of what the seller paid for expenses. Walk every unit physically with your broker and get a good take on utilities/condition.

    @Benjamin Parker

    Conventional financing for a 4 unit for a primary residence is 20-25% down. (Freddie Mac is 20% down and Fannie Mae is 25% down) And an investment property is 25% down. Rates will be higher for an investment property, but personally I wouldn’t move my life to save a little on interest if I didn’t have to. 

    Thanks, Jerry.

    It would just be a place to collect my mail really. I'm a single OTR truck driver but I think your point still stands. Letting a unit sit empty 350 days/year can't be better than paying extra interest. I guess I could actually do the math. 

    @Bjorik (lol your name auto- corrects to Bjork), 

    My agent is going go FaceTime over Skype and do a walkthrough. I'm stuck down south atm.

    Whether you need an attorney or not depends on the state the property is located at.  For example, in Pennsylvania generally you will need an attorney, but not in California, Arizona, or Tennessee.