Advice on Freddie Mac multi family small balance loan

[Christian Podedworny]

I want to start out and say i have never acquired a multi family property but I am eager to purchase my first multi family property. At this time I own a mixed use property, duplexes and single family homes. After many hours of research and looking into financing options I found a lender (Crefcoa) that underwrites Freddie Mac multifamily loans. The goal is to find multi family property which I can purchase with 20% down .

http://www.crefcoa.com/freddie-mac-small-apartment-loan-program.html

    Freddie Mac has a small multi family loan which sounds promising and 30% is not required. 

Has anyone used this type of loan and if so what were your expierences like? 

[Chris Martin]

Regarding "If I own part of a mixed use building and my portion exceeds the the loan amount I should have no issues with attaining financing ?" The 'rule' is based on net worth. So your tangible assets minus liabilities... and I believe the formula excludes your personal residence.

If you hold a lot in an LLC, then you can use the L-1 Balance Sheet (or your K-1 capital portion if multi-member) from your 1065 to assist in the net worth 'test'. But here's the rub. The L-1 is based on the company property basis, not on current market value. So a commercial lender's PFS (Personal Financial Statement) that has with your current portion (e.g. if you own 40% of the LLC) of the current market value of the LLCs assets may be a more important (and larger) figure. I don't know enough about the Fannie Mae MF lending process to know if the applicant provides balance sheet information on basis (which I think is GAAP, what an auditor would want) vs. current market value, which is what my commercial bank would generally use on a PFS.

Regardless... if you want to borrow $1M, which is the GSE MF minimum, then your borrowers (you and anyone else buying) need a combined $1M in net worth. If it is you solo doing the borrowing, then (by definition) you would need to be an accredited investor.

Hope that makes sense.