I can't find a fixed rate mortgage for my 4-plex purchase!

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I can't find a fixed rate mortgage for my 4-plex purchase!

Adam StroikPro Member
Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes

Greetings All,

I have a 4 unit building under contract and have called a dozen or so banks all of which are only offering adjustable rate mortgages.  I will not be occupying the property.  I was under the impression anything under 4 units could still qualify for residential loans.  Anyone else have this issue or can recommend a bank in Wisconsin that does fixed rate for non owner occupied investment properties?  Thanks in advance.

cheers

Adam stroik 

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Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
7y

Have you asked why they don't/won't offer conventional terms? You'll very quickly know what the issue is if you just ask them.

I had a SFR a few years ago that was quoted conventional and then ended up as a 'portfolio/commercial' loan but honoring the original conventional quote. The issue was the underlying zoning had changed to commercial over the years and the concern was that the property couldn't be rebuilt if destroyed....I only use that as an example to say that asking what the issue is the best way to get your answer.

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  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    7y

    do you have a relationship with a small local bank? they should be able to do it no problem, here is the Matrix Guide lines, FRM= Fixed Rate Mortgage https://www.fanniemae.com/content/eligibility_information/eligibility-matrix.pdf

    1Reply
  • Adam StroikPro Member
    OP
    Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes
    7y

    Scott,

    yes I do but they are only offering ARMs as well.  I have only called small local banks.  Ive had an account with US bank for years, thinking about calling them.  Thanks for the Reply

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    If you are buying through an llc, that is the problem....only an idividual can get conventional financing.  Otherwise, I don’t know what the problem could be.

    2Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    7y

    Have you asked why they don't/won't offer conventional terms? You'll very quickly know what the issue is if you just ask them.

    I had a SFR a few years ago that was quoted conventional and then ended up as a 'portfolio/commercial' loan but honoring the original conventional quote. The issue was the underlying zoning had changed to commercial over the years and the concern was that the property couldn't be rebuilt if destroyed....I only use that as an example to say that asking what the issue is the best way to get your answer.

    3Reply
  • Jeff Iverson
    Rental Property Investor · Lake Mills, WI · Member since 2018 · 8 posts · 5 votes
    7y

    Hello Adam, I got a fixed rate loan for my 4 plex on a 25 year loan from a bank local to me .

    https://www.firstcitizensww.com/default.aspx

    You can try them.  It's not a 30 year but it is close.

    2Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    7y
    Originally posted by @Adam Stroik:

    Greetings All,

    I have a 4 unit building under contract and have called a dozen or so banks all of which are only offering adjustable rate mortgages.  I will not be occupying the property.  I was under the impression anything under 4 units could still qualify for residential loans.  Anyone else have this issue or can recommend a bank in Wisconsin that does fixed rate for non owner occupied investment properties?  Thanks in advance.

    cheers

    Adam stroik 

    Seems odd... What detail(s), if any, are you leaving out? What are the reason(s) you are being given? 

    0Reply
  • Casandra M.
    Rental Property Investor · Janesville, WI · Member since 2016 · 87 posts · 42 votes
    7y

    What area of Wisconsin are you purchasing in?

    0Reply
  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    7y

    @Adam Stroik  Have you spoke to the residential lender?  Also for secondary market, you need to have owned the property in your personal name for 6 months for a cash out or other refi, and must be in your personal name for a purchase mortgage. Have they told you why they cant do an FNMA mortgage for you? 

    2Reply
  • Adam StroikPro Member
    OP
    Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes
    7y
    Originally posted by @Casandra M.:

    What area of Wisconsin are you purchasing in?

    the property is in central Wisconsin.  

    0Reply
  • Adam StroikPro Member
    OP
    Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes
    7y
    Originally posted by @Scott Schultz:

    @Adam Stroik  Have you spoke to the residential lender?  Also for secondary market, you need to have owned the property in your personal name for 6 months for a cash out or other refi, and must be in your personal name for a purchase mortgage. Have they told you why they cant do an FNMA mortgage for you? 

    thanks Scott, I have asked what the issue is and even offered to purchase in my own name. It will be moved into an LLC later if I do that. All of them have told me it doesn't matter, they are only offering ARMs for non owner occupied properties.

    0Reply
  • Adam StroikPro Member
    OP
    Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes
    7y
    Originally posted by @Chris Mason:
    Originally posted by @Adam Stroik:

    Greetings All,

    I have a 4 unit building under contract and have called a dozen or so banks all of which are only offering adjustable rate mortgages.  I will not be occupying the property.  I was under the impression anything under 4 units could still qualify for residential loans.  Anyone else have this issue or can recommend a bank in Wisconsin that does fixed rate for non owner occupied investment properties?  Thanks in advance.

    cheers

    Adam stroik 

    Seems odd... What detail(s), if any, are you leaving out? What are the reason(s) you are being given? 

     Thanks Chris, I dont know what details I could be leaving out.  Ive called a dozen banks, offered to buy in my own name.  All have said they only offer ARMs for non owner occupied properties.  Im just happy to hear I'm not crazy here.  maybe I just need to call more banks.  its nuts.

    0Reply
  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 644 votes
    7y

    @Adam Stroik Maybe the banks you're calling only offer portfolio loans and not agency loans? Are you trying to buy the property under an LLC? That would be a guarantee that you're not getting conventional financing. Even when buying through an LLC, I work with at least one lender that offers 20 and 30 year fixed terms, so it's not unheard of, just not as common.

    [email protected]
    Stephanie Medellin, Loan Factory58 Reviews
    WebsiteView Page
    1Reply
  • Adam StroikPro Member
    OP
    Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes
    7y

    @Stephanie Medellin thanks Stephanie.  I have offered to purchase in my own name.  they are all telling me they can only offer ARMs in non owner occupied properties.  From everyones responses, Sounds like I just need to call more banks!

    0Reply
  • Michael Jones
    Investor · Louisville, KY · Member since 2017 · 199 posts · 253 votes
    7y

    Move away from the independent banks. Go to fifth third or Chase.

    1Reply
  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    7y
    Odd, Im working on a NOO duplex right now, on the resi side, I havent done a FNMA loan in many years, but she didnt see a problem, Im ding a cash out on it, we will see, you may have a problem because you reside out of state, try a mortgage broker or bigger bank, the out of state thing can scare small banks. 



    Originally posted by @Adam Stroik:
    Originally posted by @Scott Schultz:

    @Adam Stroik  Have you spoke to the residential lender?  Also for secondary market, you need to have owned the property in your personal name for 6 months for a cash out or other refi, and must be in your personal name for a purchase mortgage. Have they told you why they cant do an FNMA mortgage for you? 

    thanks Scott, I have asked what the issue is and even offered to purchase in my own name. It will be moved into an LLC later if I do that. All of them have told me it doesn't matter, they are only offering ARMs for non owner occupied properties.

    1Reply
  • Javier D.
    Investor · FL · Member since 2017 · 266 posts · 220 votes
    7y

    @Adam Stroik

    Tell your real estate agent to refer you to a mortgage broker. A direct lender should be able to do conventional 30 year financing or try to find comps (4plex) sold and contact owner or listing agent for those you find and see what they did. You can also find public mortgage info on those comps and if they werent sold to another bank you should be able to find who holds the mortgage whom im guessing would do it again.

    Good luck.

    1Reply
  • Heather H.
    Rental Property Investor · Las Vegas, NV · Member since 2016 · 83 posts · 98 votes
    7y

    @Adam Stroik talk to JJ Bliss at BD Lending. I'm buying a duplex right now with a 30-year fixed. 

    1Reply
  • Heather H.
    Rental Property Investor · Las Vegas, NV · Member since 2016 · 83 posts · 98 votes
    7y

    @Adam Stroik Sorry my last post didn't give much detail. To elaborate, JJ at BD Lending is a mortgage broker for investor mortgages. I initially found BD Lending here on Bigger Pockets when I was looking at buying a 7-unit building, and was having a hard time finding a lender that would lend on properties with over four units (unfortunately I didn't move fast enough and lost that deal). I had also been unable to get regular mortgages on SFRs or duplexes at regular national or local banks before.

    BD Lending can find loan products for buy & holds with any number of units, which include 30-year fixed or adjustable rate mortgages. It is hard money, but unlike some HMLs, the focus isn't just on short-term, and the rates aren't crazy high (in my opinion). The rates I'm getting for a 30-year fixed mortgage on the duplex I'm buying are just over 7% without buy-down, or as low as 5.5% with it. Of course these may be different depending on the value of your deal, the down payment, etc. BD Lending is based in Chicago, I believe, but we do everything over the phone and email.

    I don't work for them or stand to gain anything by making this recommendation - they just came through for me where no other lenders did. Good luck!

    1Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    7y
    @Adam Stroik Conventional will work. Probably will need at least 25% down.
    0Reply
  • Jennie W.
    Mc Gregor, TX · Member since 2018 · 41 posts · 35 votes
    7y

    @Adam Stroik I sent you a message with the info of the person we used.

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    7y

    @Adam Stroik I am also puzzled by your issue. I work with several out of state investors and I actually have two remote closings with Bay Area investors next week, both small MF. There are some compliance hoops to jump through for the lender to facilitate a closing out of state (meaning you are not going to fly to MKE for the closing), but we do it on a regular basis, my lender has it pretty much down to a T.

    2Reply
  • Adam StroikPro Member
    OP
    Investor · Imperial Beach, CA · Member since 2017 · 43 posts · 5 votes
    7y

    Thanks All, for the suggestions.  I knew I wasn't crazy.  Ill be calling more banks today.

    Cheers All

    1Reply
  • Javier D.
    Investor · FL · Member since 2017 · 266 posts · 220 votes
    7y
    Originally posted by @Adam Stroik:

    Thanks All, for the suggestions.  I knew I wasn't crazy.  Ill be calling more banks today.

    Cheers All

     Most small banks, credit unions keep their paper in house. You want a fnma guideline approved product or similar.

    Contact a local mortgage broker.

    1Reply
  • Diana Muresan
    Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
    7y

    @Adam Stroik hmm, I've never heard of such thing and I close dozens of MF per year. Matter a fact it's very hard to get an ARM for investment properties and even more so for a fourplex. The standard program is 75% LTV on both Fannie and Freddie on a 30 y fix program. WI is no different than other states...

    1Reply
  • Dennis Haefner
    Anamosa, IA · Member since 2018 · 10 posts · 3 votes
    7y

    I can buy up to a 4-plex with a 30 year fixed mortgage if I purchase in my personal name. I've run into a problem getting a 30 year fixed mortgage when I tell them I want to purchase using my LLC. In that case, they want to do a commercial loan with a 5 year renewal amortized over 20-25 years. Is that what you are running into?

    1Reply
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