4plex - How to finance without VA or FHA?

5 Replies

Hello everyone!

Just moved into Virginia after my 5 year tour with the air force overseas and found a property with 2 houses on it both built in 1966 & both being duplexs for 185,000 total. Sadly all the units are filled with 1yr & 2yr leases and locks me out from being able to use my VA or FHA loans.

Currently I am looking for strategies that will help me obtain enough capital to afford the 20% down to take over the current loan and get my feet started in RE. Any and all advice is welcome!

Thanks in advance!

@Andrew K. Thank you for your service.

If you are going to buy this as a conventional (Fannie/Freddie) then you will be 25% down. You could potentially get a loan with 20% down, but that would be a portfolio loan and you will take a hit on rate/points.

Good luck.

That property may be difficult for the owner to sell, and not much in demand by owner occupants.  In these situations, owner financing might make sense for both you and the seller.  I’d ask.  

Properties with more than 4 units also similarly difficult to sell, because residential mortgages go up to 4 units, but not over.  And multi family folks are typically looking for the larger properties.  This 5+ unit space can be a nice owner carry niche.

@Andrew K. ask the seller if they thought any of the 4 existing tenants could be financially incentivized to leave early? 

If so have a conversation with that person to see if that could be a possibility. If so, then you could use your VA or FHA and the total cost of the down and the incentive paid would be less than 20-25% down? Or see if the seller will carry the note long enough to get to the expiration of one of the leases. At that point complete your financing as an owner occupied?

Thanks for the idea's!

@Upen Patel Sadly I have around 3.5% down at the moment. Still working on saving up.

@Kevin Romines , First thing I did was check for that. None of the tenants wish to leave early. All are military and are set for their duration of tour.

@Kerry Baird & @Ivan Gurrola - This is a 4plex property and the owners want to relieve themselves of the loan entirely. I wish I could get into 5+ properties but I need to network first in hampton since I am very new here. I do agree it would be a nice niche!