Financing my first 4-plex.

14 Replies

Would appreciate advice on reserving capitol to buy additional investments. I am under contract for a 4 plex, no rehab needed and it's rented. Typically it's 25% down conventional with about $11k in cloisng costs/pre-paids plus the $70k down and this eats into a lot of my capitol.  I want to be able to acquire several more of these especially as my market goes into the winter and prices tend to drop.  Any advise or loan products I should be aware to lower my costs and preserve capitol?

Thank you in advance for taking the time to share with me your experience in lending.

Is doing an owner occupy loan like FHA off the table for you? I know that's what everyone recommends, but it is a great tool to get into the game. Otherwise, you can get a conventional loan as low as 3% down, but 5% is easy to get with decent credit.

If you are in a position where you won't qualify for FHA or owner occupy, I would recommend looking into private money loans.

If you own a small business, you should check out SBA loans. The same owner occupied rules apply as John stated in his reply. I believe you would have to occupy at least 50% of the property but you could use one unit for an office and another as your residence.

Good luck!

Originally posted by @John Boychuk :

Is doing an owner occupy loan like FHA off the table for you? I know that's what everyone recommends, but it is a great tool to get into the game. Otherwise, you can get a conventional loan as low as 3% down, but 5% is easy to get with decent credit.

If you are in a position where you won't qualify for FHA or owner occupy, I would recommend looking into private money loans.

Someone please correct me if I'm wrong, but you cannot get a conventional loan on a 4-plex rental below 25% unless you are owner occupying.   I've been speaking to several lenders for a few years on residential multifamily and 25% down is the minimum I've ever been told for non-owner occupying.  I have had agents and other investors shoot me figures that included 20% or lower, but then they are alway correcting themselves when I bring up the 25% rule.

Originally posted by @Ryan Moore :
Originally posted by @John Boychuk:

Is doing an owner occupy loan like FHA off the table for you? I know that's what everyone recommends, but it is a great tool to get into the game. Otherwise, you can get a conventional loan as low as 3% down, but 5% is easy to get with decent credit.

If you are in a position where you won't qualify for FHA or owner occupy, I would recommend looking into private money loans.

Someone please correct me if I'm wrong, but you cannot get a conventional loan on a 4-plex rental below 25% unless you are owner occupying.   I've been speaking to several lenders for a few years on residential multifamily and 25% down is the minimum I've ever been told for non-owner occupying.  I have had agents and other investors shoot me figures that included 20% or lower, but then they are alway correcting themselves when I bring up the 25% rule.

 For multi-unit investment purchase with conventional loan, you have to do 25% down. No option. Anything else someone tells you is just wrong.

You can go with a Non-QM loan also known as a portfolio loan. These loans are designed for investors and have higher rates than a Fannie Mae loan. But you can go up to 85% LTV (15% down) on a 4 plex purchase with a min. of 680 credit score. Or you can go up to 80% LTV (20% down) with a min. of 620 credit score.

If you go that route, I would plan to refinance them into a Fannie Mae loan as soon as you have 25% equity or more? You can use this loan as a stepping stone to buy as many as you can with the goals of refinancing to better rates within a few years from there?

I was just quoted 15% down with Cardinal if I owner Occupy....using Fannie Mae product.