How to Finance Multi-Family Apartment - First Time/Mentorship

8 Replies

Hi All,

My name is Kyle, and I will be relocating near a C-level area, where I will be starting to review multi-family apartments (4 units or less). I would like to understand what are some of the best ways to finance a multi-family property once the down payment is fulfilled; thus the extra cost associated with the property is needed to renovate for optimal rental status. Reason being, I have decent savings, but would not want to utilize every penny on one property.

Some background, I am a current renter with no current real estate deals, I will be acquiring my real estate license shortly.

Any input is welcomed. I would be much interested in connecting with fellow investors to mentor from and work within the tri-state area.

Thank you for your time,

Most 1-4 units buildings qualify for regular conventional financing just like a normal SFH, 5+ usually require commercial financing.

Will you be house hacking? As far as types of loans you can use FHA, low % down conventional w/ PMI, or a regular 20%+ down conventional removing the PMI.

If it is 4 units or less, just get a conventional loan 30 year fixed. This should be easy, low interest rate and good terms. If you'll be living in it, then you pay be able to put less than 20% down.

@Christopher Hand Thanks for the reply, I will be utilizing a conventional loan for this MFA, but my question is after the down payment (E.g., renovation costs). What are some methods to finance a renovation of the property? Is it just utilizing your own funds for this process, or are there secondary loans that are best for these? Thanks,
Hi @Todd Dexheimer , thanks for the input, but similar to the previous statement, my question falls after the initial conventional loan has been acquired and you purchase the property. Once the renovation costs are realized, what are some ways to finance this? Appreciate the time,
Originally posted by @Kyle Lauriano :
Hi @Todd Dexheimer, thanks for the input, but similar to the previous statement, my question falls after the initial conventional loan has been acquired and you purchase the property. Once the renovation costs are realized, what are some ways to finance this?

Appreciate the time,

There are renovation loan products available. They will lend at 80%+ of the purchase plus renovation. I would find a mortgage broker that deals with that. If your living in it, then you may be able to do a FHA 203k loan.

The other option is to get a line of credit on the house after purchase. 

Originally posted by @Kyle Lauriano :
@Christopher Hand Thanks for the reply, I will be utilizing a conventional loan for this MFA, but my question is after the down payment (E.g., renovation costs). What are some methods to finance a renovation of the property?

Is it just utilizing your own funds for this process, or are there secondary loans that are best for these?

Thanks,

If you're purchasing a "fixer upper" and want the lowest down payment (and you're going to live in it), FHA is the cheapest way to go. Use the 203K program because you can fund the renovation through the loan.

Hi @Stephanie P. , Thanks for your insight, you are right on that, but for me, I will not be living in the property, so I would have to go another route to finance the renovation while remaining cost-effective. Thank you for the feedback, hope to connect with you in the future.