Looking at property that is comprised of 16 units total but in 4 buildings with 4 units each. For financing purposes would it be better to try for one commercial or work to get the seller to structure the deal so each building is "sold" separately? I've not other outstanding loans except a personal residence and have enough to cover a 30% downpayment if needed. Thanks.
Real Estate Agent · Plano, TX · Member since 2015 · 734 posts · 511 votes
9y
My vote is 4 X conventional loans. You get longer amortization, fixed rate for 30 years (historically low rates!) and the opportunity to sell separately if you need to.
A commercial loan could balloon in the worst possible time for you and you have no control over that.
You might not have a choice in the matter. How many APNs are listed on the Preliminary Title Report? Listing agent should know (or she/he sucks at life).
Each building is on it's own parcel. Based on the responses, it sounds like this is the key if it is even possible to go 4 conventional vs. commercial. Useful to know, thanks everyone.
It seems to me you need to verify you can even get 4 conventional loans concurrently or consecutively from your lender(s). Why not go in the middle and try a Portfolio Loan. Do not quote me, but, I think you can arrange terms so each property can be sold/refinanced later if desired. As long as you have separate titles for each. It would be like you refinancing 4 hard money loans into one portfolio. I think it would be worth a try. Call your local banks and Credit Unions to see if they can do it. I know @Brandon Turner has mentioned using Portfolio Lenders a lot. Hope this helps. :)
Rental Property Investor · San Francisco Bay Area, CA · Member since 2009 · 48 posts · 21 votes
9y
4 conventional loans may mean 4 times the closing costs. Probably best to run the numbers under not scenarios if you can get quotes for each.
The key to conventional is separate parcels and it sounds like that part isn't an issue.