Conventional Financing for 6 or More Units

3 Replies

Hello Everyone,

Are banks giving investors hassle when trying to obtain financing for multi-family properties less than 6-units?

If so, what are some ways to obtain funding for 2 or 3 unit apartments at a reasonable interest rate?

Thanks in advance for your help!

@Robert Vieira Residential / conventional financing is only for up to 4 units. 5 and above needs commercial / business financing.

Interest rates are pretty standard now. Its not like you will get 6% with a market rate of 4% The process for under 4 units is pretty easy, basically you apply with a bank, they run your income / credit/ DTI and tell you how much you can get approved for.

Originally posted by @Robert Vieira :
Hello Everyone,
Are banks giving investors hassle when trying to obtain financing for multi-family properties less than 6-units?

If so, what are some ways to obtain funding for 2 or 3 unit apartments at a reasonable interest rate?

Thanks in advance for your help!

In my area, it is common for larger apartment complexes in the 6-20 unit range that are separated into smaller parcels of 3 or 4 units so that they can be bought with traditional residential financing.

For example there is a 6 unit complex for sale that I am looking at that is two separate 3-plexes on 2 different parcels of land. The downside that I can see is that you will possibly have separate closing costs, separate appraisals, separate inspections, etc. The good news is that you will be able to have a larger building with lower interest rates, 30 year fixed rate mortgages, and without the commercial loan requirements.

I have a lender in my area that will let me do up to 10 residential mortgages and still be able to meet Fannie Mae guidelines. That includes my personal mortgage so 9 rentals for me and 9 for my wife, assuming we can qualify for that many. Then it is off to commercial, or just pooling cashflow and paying cash once or twice a year after that. Too soon to tell.

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