MF Home or Commercial Real Estate

3 Replies

I'm looking into purchasing a duplex (or 4) to rent. The same seller has 4 different duplexes up for sale on the same street. I've thought about maybe trying to get all 4 (8 total paying units). They are not listed to buy together but I would try to get a "package deal" of sorts.

My question is since these are all "separate" and not under the same roof, would having 8 units on the same street be considered multifamily residents or commercial real estate?

Thanks guys!

If you plan to buy all of them then yes it would be considered to be 8 units and you can qualify for a commercial loan, rather than getting 4 residential loans. 

@Matt Ritchie the situation you describe really gives you the flexibility to choose which way you want to create the financing.

Option 1: The local banks/credit unions will probably agree to get all 4 duplexes under one commercial loan:

Pros: one set loan fees, one set of books, one tax filing company

Cons: Balloon type mortgage, shorter amortization period, all properties will have to be under one entity and you normally won't be able to sell just one of them

Option 2: Separate loans (local banks or even the big banks)

Cons: 4 sets of loan docs, fees

Pros: you can get a conventional loan with a 30 year fixed for each property, you can partner with different partners foe each property, you can get partners to be the loan guarantors separately and you can sell each duplex off at any given time.

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