Moving from SFH to Apartments

[Dennis Perry]

Hey guys,

I'm not a newbie anymore! I have 3 investment properties and I am looking to expand in small apartment buildings. I have been doing my research I wanted to tap the community about non conventional financing ideas.

I am aware I can refinance the houses and use the money as a down payment on the building. However, what I want to know are there any lenders out there that will take one or more of my houses as collateral (I currently own all 3 properties outright) and give me a full loan to purchase an apartment building? Is that something that is done or am I making this up in my head?

Furthermore, if anyone that can name lenders that do this in MI and/or TX that would be awesome.

Thanks!

[Erik W.]

@Dennis Perry, congrats on having 3 fully paid off properties!  

For your $110K house, you will likely need to do a cash out refinance at 80% LTV, so that will give you $88K to put toward the down payment on your 8-unit. That should do it, if you can get an 80% LTV first position mortgage on the 8-unit. The down payment will need to be 20% of $400,000 purchase price ($80K), so you'll have just enough to cover that plus closing costs on the SFH refinance and the 8-unit. Commercial/MF unit appraisals cost more than a SFH, so don't be surprised to pay between $1500 - $2000 for just the 8-unit appraisal. Then add in closing costs, etc. and you might walk away with a few extra bucks to plant new flowers at the 8-unit.