Making the jump from residential to Commercial Multifamily

[Anthony Zotto]

Hello BP!

I have been collecting duplexes for the last few years and I am looking to keep my duplexes, but make the jump into small apartment buildings around 8-12 units or so. I live in upstate NY, and there are very few 5+ units in my market. I was wondering if anyone could maybe share their story about transitioning from residential to commercial multifamily? Thanks!

[Ryan Howell]

I've done the same thing here in Western NC - Asheville area. Biggest difference is the lending, otherwise it's very similar. This size is still smaller than what large syndicators are going after so we still deal with the same type of owners, typically local landlords who self-manage. Find a good local bank who likes multifamily. Know you'll probably have 5-10y fixed with 20-25y amortizations and won't be doing 30y fixed loans most likely. The lending will be primarily driven by your DSCR, experience and your current assets. In my opinion they are way easier than conventional underwriting if you have a solid track record which it sounds like you do. You will need to look at things from a cap rate perspective for the valuations which in my experience makes it easier to BRRRR than with 2-4 units if you do value add.