Large multi family funding

7 Replies

I recently stumbled across a 12 duplex 24 unit property that seemed like a good deal. So I got to thinking about how I would fund the deal if I decided I wanted it. So I was wondering where would I go for a loan like that (price tag is under a Mil) and what would the qualifications be like for big multi family properties like this. What is the normal down payment for this type of property.

24 unit is tiny. Under 1 million is tiny. Hard to find lenders under 1 million after down payment.

Originally posted by @Joel Owens :

24 unit is tiny. Under 1 million is tiny. Hard to find lenders under 1 million after down payment.

 But am I correct in assuming that I would have to get a commercial loan 

You are correct you would need a commercial loan.  I have taken out several in the last few years less than a million so you should be able to find a bank.

@Andrew Smith If you're OOS (out of state) and you're just entering the area, your best bet it to call a few commercial brokers and ask if they know local lenders (portfolio lenders) who will a) do deals in your strikezone and b) do deals with OOS investors. While you have them on the phone, try to establish a rapport with them. They are the gate-keepers.

Sometimes local banks don't want to deal with OOS, because they issue recourse loans, and don't want to have to try to collect across state boundaries.

To your question as to whether or not you need a commercial loan: you said "duplexes" which might suggest it may be a portfolio of properties, not a true 24 unit MFR. If each "duplex" are on their own APN's, you could potentially try to get residential mortgages (4 unit or less) on 10 of them, and put the other 2 under a portfolio loan. That would be a pain in the *ss, but technically feasible.

Good luck and hope that helps!

James

@Andrew Smith under 60 units at 50k ballpark a unit is the worse prices because you are dealing with other mom and pop investors and the worse lending. I was looking at 60 unit and below buildings a year ago and it just did make so sense. Let me know if you need a second set of eyes on the numbers.

Lane, did you mean to say "it just did not make sense"? 

With commercial loans, is the expectation that the buyer (me) would bring in 30%? 

I am trying to understand how to get hard-money-loans, then use this money as the down-payment and get a commercial loan for a multi-family, in the 20-50 unit range.

What is the sequence of events, that will be most helpful as starters.

Originally posted by @Joel Owens :

24 unit is tiny. Under 1 million is tiny. Hard to find lenders under 1 million after down payment.

Andrew, there are a ton of local banks that would lend on a deal like this. A loan on a 24 unit package will be very easy to find. I would start talking to the banks that are near the property. Talk to the credit unions and banks with only branches in that MSA. You can also try some national lenders, but they can be a lot more difficult. I have around 50 properties with loans under $1M and they are almost all with local banks/CU's. US Bank is the only national bank that I have successfully used. 

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