Looking for first Multi, what would you do in this scenario?

12 Replies

We currently have 4 single families, one with a mortgage and 3 clear but we're closing a HELOC on one of those this week so we can expand.

We want a multi family, but the HELOC won't allow a 100% purchase. My concern is how many mortgages is too many? We have our primary residence, one of the investment properties, and now a second investment property. Would adding a 4th first position be an issue to a bank?

Where should we start is I guess what I'm really asking!!! Thanks!

Matt,

It's great your thinking traditionally! Now, think outside the box... find a PML/HML to assist you with this acquisition. If it is profitable, people want in! Message me...we can share ideas.

You should be able to get a 4th Fannie Mae Loan as long as the new property is 1-4 units. Beyond that you're into commercial financing and they don't care how many loans you have as long as your overall financial position is healthy.

I would definitely do this because with the Fannie loans they are fixed rate 30 year notes at very low rates. I've heard these days you can go up to 10 Fannie Mae loans pretty easily. Back when I did it in 2011 you could only do it with specific lenders on bank owned property.

I regularly finance up to 10 properties with FNMA direct funding. Many banks limit their exposure to 4, but I spend a very long time in locating a firm that will allow me to fund 10 properties for 1 investor with standard conventional terms. We have had several that used a strategy to go beyond ten. One of our clients has 44 financed properties with a com0bination of FNMA and commercial financing to his S corp.

I would be happy to discuss your personal transaction if you would like to schedule some time to verbally connect.

Hey @Matt Crow .  Want me to put you in touch with a lender?  I work with a great company that oftentimes lends when other companies refuse to.  They're right over in Bedford.

Matt Lefebvre, Real Estate Agent in NH (#070207)

Thanks guys , @Russell Tidaback , is PML a good option for a buy and hold? I always think of it as a flip financing option, but maybe I'm thinking incorrectly?

@Matt Crow, Depends on the PML, the terms, etc.  If it fits your numbers and needs then yes. 

Look for lenders who do 5-10 loan conventional 30y fix loans with 25% down, 30% for 2-4plex. e.g. here flagstar, citi bank and local community banks offer these. They require 6m reserves.

Thanks for the input guys, here's a follow up.

I found a place that's fully rented for $2,500/Month. The monthly rent will be 1% of the purchase price. We'll put 25% down, and with taxes and insurance will clear about $250/month off of this property after factoring in vacancy, capex, repairs.

That's not what I was hoping to see on a 3 unit place. That's $3,000/year on $62,500 down (4.8%)

What am I missing, if anything?

First Key Lending offers one-off loans on SFR investment properties and they don't care how many properties you own or mortgages you have. They underwrite the DTI of the property much more than your income which can be a benefit to a lot of people and they offer fully amortized 30 year loans with no PPP up to 75% LTV. Could be worth checking into.

First Key Lending offers one-off loans on SFR, and multifamily, investment properties and they don't care how many properties you own or mortgages you have. They underwrite the DTI of the property much more than your income which can be a benefit to a lot of people and they offer fully amortized 30 year loans with no PPP up to 75% LTV. Could be worth checking into.

Matt I am researching one my self. Its a 10 unit with current renters. The units cater to single and it composed if 1 bedroom 1 bathroom. Right now i am still in the early research portion and i have asked for the books. Still some stuff that your questions are pointing out i should ask. Hopefully yours works out.

Hi Matt, 

It doesn't look like a deal. Plus it doesn't look like you factored in any closing costs, management fees (you may not want to self-manage now or later in the future) or CAPEX reserves into your calculation. Are they getting market rent for all of the units? Sometimes the numbers just don't work. Be patient and keep searching and you will find a deal.

Happy investing.

Mike