Loan Type for 6 plex-building

Multi-Family and Apartment Investing
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Loan Type for 6 plex-building

Quynh Tran
Member since 2024 · 1 post · 2 votes

Hello, I am new here. I am looking at a a 6 plex around 1.1M. I want to know what kind of loan I should go for assuming everything is check out. I have enough to put 20-30% as a down payment with ~800 credit score. I called couple Fannie Mae direct partners, and they said they can only do 1M loan at the minimum for multifamily loan. TIA

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
2y

Obviously anyone who said great deal or sounds like a great didn’t read your post. They have no idea where the property is, how much rent it’s bringing in, or what it’s worth. It could be in a small town in the Midwest and only worth $400k or NYC and be worth multiple millions. 

Does it being in $11,000/mo for the 1% rule?

Does it being in at least $7,200/mo in rent to cover 1.2% DSCR loan if you put $275k down and the insurance/property taxes/utilities are under $500/mo? If so that would give you about an 5%COC and a 8% total return. So that would be my BARE minimum. (Increase the minimum rental income by 110% of the amount the taxes/insurance/utilities are over $500.)

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  • AJ WongBusiness Member
    Real Estate Broker · Oregon & California Coast · Member since 2022 · 834 posts · 696 votes
    2y
    Quote from @Quynh Tran:

    Hello, I am new here. I am looking at a a 6 plex around 1.1M. I want to know what kind of loan I should go for assuming everything is check out. I have enough to put 20-30% as a down payment with ~800 credit score. I called couple Fannie Mae direct partners, and they said they can only do 1M loan at the minimum for multifamily loan. TIA

    Hi Quynh, sounds like a great deal! I just sent you a direct message. Have an excellent referral and resource for 5-10 units. Investors can go full income or utilize the rental income as a DSCR loan with 25-30% down. Cheers. 
    541-800-0455
    Sesemi | STR Brokers powered by Fathom Realty 516 Reviews
    WebsiteView Page
    0Reply
  • Account Closed
    Lender · Member since 2022 · 74 posts · 21 votes
    2y

    It a great deal dm me and I can point you to a hedgefund that can close you in 14-21 days

    0Reply
  • Simmy AhluwaliaPro Member
    Lender · Atlanta, GA · Member since 2015 · 1k+ posts · 200 votes
    2y

    @Quynh Tran - if you're still looking for quotes, let me know. DSCR will be very important here.

    0Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    2y

    DSCR for these sort of loans right now is 25% down, 30-year amortization, with a rate around 7%, depending on the lender and deal.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Obviously anyone who said great deal or sounds like a great didn’t read your post. They have no idea where the property is, how much rent it’s bringing in, or what it’s worth. It could be in a small town in the Midwest and only worth $400k or NYC and be worth multiple millions. 

    Does it being in $11,000/mo for the 1% rule?

    Does it being in at least $7,200/mo in rent to cover 1.2% DSCR loan if you put $275k down and the insurance/property taxes/utilities are under $500/mo? If so that would give you about an 5%COC and a 8% total return. So that would be my BARE minimum. (Increase the minimum rental income by 110% of the amount the taxes/insurance/utilities are over $500.)

    2Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    2y
    Quote from @Quynh Tran:

    Hello, I am new here. I am looking at a a 6 plex around 1.1M. I want to know what kind of loan I should go for assuming everything is check out. I have enough to put 20-30% as a down payment with ~800 credit score. I called couple Fannie Mae direct partners, and they said they can only do 1M loan at the minimum for multifamily loan. TIA


    Others have noted the Multifamily DSCR Loan option - just adding this article on the topic published last year on BP if it helps!

    https://www.biggerpockets.com/blog/multifamily-dscr-loans

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
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  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    2y

    @Quynh Tran

    I would look for community banks and credit unions in the market where you're investing. Loan terms are going to vary, based on the asset, your liquidity, net worth.

    We've got three deals currently under contract with a credit union, 25 yr am, 6.75% rate, 2 years I/O, 5 yr term.

    Our community bank could not compete with these terms.

    Looking forward to seeing who you find

    Good Luck

    Gino

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    0Reply
  • Jon Puente
    Lender · Charlotte, NC · Member since 2020 · 224 posts · 221 votes
    2y

    Hey Quynh, 

    It depends on what your goals are for the property. Are you wanting to do some rehab and bring the value and rents up and then rent it out? If so, you would need private/hard money so you can do renovations, and then AFTER you would do more of a permanent solution like a DSCR.

    But if its pretty close to move in ready, then DSCR is your option. As long as your gross rents (per appraiser) cover your PITIA payment, then you will be good, especially with that down payment.

    Great Question!

    0Reply
  • Ian Stuart
    Lender · Seattle, WA · Member since 2017 · 118 posts · 161 votes
    2y

    Assuming you're looking for a fixed rate permanent loan on a stabilized property, I recommend regional & national banks. Think Chase, Wells, US Bank, Key, and Everbank - plus any regional players in your market active in the multifamily space.

    If you're looking for a value-add rehab / bridge loan - try both bank/cu's and private capital / hard money lenders. Hard money will charge you an arm & leg (additional points, high rates, etc.), but they'll get you the leverage you need. Google "private capital multifamily" and "hard money multifamily" for some leads on local hard money lenders in your lender and reach out directly. They'll hook you up with high leverage, full term IO financing and will cover some of your planned renovation / capex costs.  

    0Reply
  • Connor Hibbs
    Lender · Ellington, CT · Member since 2024 · 210 posts · 103 votes
    2y

    Hi Quynh, the main questions you'll want to find out as you look for a loan on this property are:

    Does this property need rehab, are you looking for a bridge loan to secure it quickly, or are you looking to hold this as a long-term rental?

    Is the property occupied and if so, what are the rents? With long-terms you'll want it filled out or close to full whereas with a rehab you'll want it empty or relatively empty to be able to start renovations as soon as it's been purchased.

    Try to find out more about the cash flow, tenant history, and if it will need renovations as those will be the key indicators for what type of loan you should be looking for.

    1Reply
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