30 year Financing On a Six Plex - Is It Possible?

Question

Hi BP, so I know anything above 4 units technically falls into commercial. Is there any way to finance a 6 plex for 30 years given that I would be able to come up with 20% down payment? Thanks.

Brian Gibbons · Answer

don't put lipstick on a pig!

Creating new uses for an income property ain't easy

Renting out rooms in college towns is one of my favorite ways to increase Cashflow tho. :)

Bill Gulley · Answer

Best to get a lower price than trying to make it a deal by getting creative on your income side, at least with a 6plex! Unless your seller finds a cash buyer, they will have the same issue with a thin cash flow and any buyer's banker, which usually means no sale until they drop the price. :)

Marc C. · Answer

30 year is available, but why would you want it? If the cash flow isn't sufficient for your needs at a 20-25 year amortization, you're likely paying too much.

Did you include a seller-financing offer in your LOI?

Zach Quick · Answer

@Ralph Miller Sure, call around to local banks and ask. Typical terms will be 15,20, or 25 but that doesn't mean that someone in your market isn't willing to finance on 30 years.  Just realize your interest rate will likely be higher than say a rental house financed on 30 years.

Ralph Miller · Answer

Thanks @Mindy Jensen, I am well connected wit Jeff, we work together for some time now. Regretfully, I can't attend his meetings (which are held Tuesday evenings) because of my work schedule (evening shift). However, I network in couple of different ways one of them being visiting local management companies before my work.

Mindy Jensen · Answer

@Ralph Miller, if you haven't already, connect with @Jeff Valentino. He's an agent in Orland who runs the Orland meetup. No idea when the next one is...

Ralph Miller · Answer

@Bill Gulley your summary is right on. Unfortunately that's what the market seems to be right now. Uneducated 'investors'  are jumping on 'deals' without properly analyzing them.

David Faulkner · Answer

Gotta love those pro formas ... so, basically, if I understand correctly, the current owner and selling agent want you to come in and pay them full retail price as if it were already performing, then do all the work and investment to get the property actually fully performing in reality for free. Does that pretty well sum it up, then? :)

Ned Carey · Answer

@Ralph Miller I didn't have a specific number of years. Just so you and others understand a mortgage can be amortized over a longer period than the mortgage lasts. There is a balloon payment or at the least a readjustment of interest rates after a certain period.

Ralph Miller · Answer

Yes, after visiting four local banks I can now say 30 year is possible. Not sure what number of years did you have in mind referring to "shorter call" but what they're offering me is 5 year ARM which could then be followed by another 5 year ARM.

30 year Financing On a Six Plex - Is It Possible?

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