Financing 3-4 plex

2 Replies

I have a town house with no mortgage (value $150,000 and about $20,000 cash. I'm am trying to find out the best way to finance a 3-4 plex in the 100,000- 200,000 range. Any suggestions would be appreciated. I am in NW Florida.

Hi Rick, 

Welcome to Bigger Pockets!

If you go the conventional route (like w did) you will need 25% down for an investment loan (20% if it was a single family home), and expect to pay about .5% above the going rate since it is an investment.  We've done 30 year fixed rate loans on our multi family properties, and put the first 3 in just my husband's name (our home mortgage is in his name only as well).  Once you have 4 mortgages, financing gets more difficult, and you have to come up with 5% more for the down payment, so we plan to put the next few houses in my name only.

It's great that you have your home paid for, and I would be hesitant to touch that, but maybe take out a loan against it to help with the down payment.  How long would it take for you to save up otherwise?  You also will need some type of reserves- 6 months payments, taxes, and insurance is a general (conservative) rule of thumb, but some banks are ok with 2 months' expenses.  Equity in your home might count, retirement accounts are another source of reserve money, but since you would be penalized for taking an early withdrawal the usable amount is less.

That's just my 2c, I am sure others will be able to tell you what worked for them!


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