Investor · Columbia, IL · Member since 2015 · 57 posts · 24 votes
I recently went under contract on (2) 4-plexes (same seller) with a purchase price of $47,500 each. Based on what I have read on BP, it was my belief that I should go conventional on these loans (I only have one conventional on my primary residence). However, I have now spoken with two separate lenders and they both want me to go commercial. One even told me that the government won't allow conventional loans of less than 50k because this causes a red flag with the closing costs being such a high percentage of the loan value. I'd love to hear feedback on this. Specifically:
1) Has anyone ever heard of this 50k loan min on conventional, or are these guys just trying to push me down the path that is better for them and not necessarily me?
2) Assuming conventional is an option, which would you do? 2 conventional loans or one commercial (20 year amortization, 5 year balloon, 4.5% APR with 20% down).
Auburn, NY · Member since 2015 · 2 posts · 0 votes
10y
sounds like where I'm from.im.looking at fully rented 3 plexes at 35 to 40 k and duplexs at 30... try the smaller banks for loans under 50 k. If yr in a credit union that is a plus...but I was always under the impression 1 to 4 residential.. 5+ commercial.
Investor · Columbia, IL · Member since 2015 · 57 posts · 24 votes
10y
Thinks @Chris Mason. I am going to hit up some of the local small banks to see if they can do the deal. @Jerry Padilla, if you have any experience here I'd definitely appreciate it.
@Chris M. I am curious, why would doing conventional financing on each property mess things up? Is this due to costs?
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
10y
@Eric Castelli, well you've heard how a furniture store doing a credit pull the last week of escrow can screw things up, right? You're essentially proposing for there to be a surprise unknown $50k debt on your credit pop up in the underwriter's inbox at the last second!