I just got off the phone with my mortgage provider. I am looking to purchase my third property, a 4 unit building that is adjacent to the one that I currently own. I was hoping to get around the need for a 25% down payment by getting an owner occupied loan, but after speaking with the mortgage provider, I was informed that the maximum 75% LTV applies whether the property is owner occupied or not. If I had 25% as a down payment, why would I waste my time going the owner occupied route?
Anyway, she suggested an FHA loan, but I already have one on my current property and am not able to get another.
So basically I am stuck as of right now. I have enough cash to put down 10-15%, but not nearly enough for 25%. I was wondering if there was any way around this to be able to purchase another multi-family without having to have a huge down payment? Perhaps smaller banks?
Will you be occupying the property? It could be tough to convince lenders that after your third investment property you are still living in an apartment. You really should be talking to a local bank with a commercial lending dept. They might be able to cross collateralize or have some other options. You should have a relationship w this type of bank already. You should have your checking accounts with a bank like this and already have a relationship @Anthony Gayden .
How much equity is in the 4 unit that you are buying, you could buy with little or no money down if the numbers work out.
Try looking for a bank that is a portfolio lender. They are often more flexible than non portfolio lenders. The bank in my local town will lend up to 90% on investment property.
- Get a portfolio loan, so some of the equity/appreciation on your current investment properties can be used towards the new one.
- Find a partner to makeup the difference to get to 25%.
- If the appraisal of the property is higher then the purchase price, then you might be able to "buy up" the rate (i.e. take higher mortgage rate) and get cash at closing to help with the closing cost/down payment. This is tricky, as guidelines need to be followed as to how much can be credited. A knowledgeable banker should be able to take your details and determine if this is an option.
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I agree with Upen Patel that you should bring in an equity partner to make up the difference. Of course that depends on how well the numbers work for both of you.
Two other options:
1. Ask the seller if they will carry a 2nd note for 10 to 15% of the purchase price.
2. Borrow the amount from a friend/family member at 6 to 8% interest.
How much equity do you have in the home that has an FHA loan on it? Is the home a Unit property or SFR? Do you have a family or is it just you living alone? If you were to occupy this home would it be a closer commute to work?
Give us some more information and I'll explain further what can be done to get this funded.
It's possible but before I go on and on I need more facts.
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