Multifamily Loan- 6 Unit

7 Replies

Hello, I was looking to purchase a investment property. There is a 6 unit available for under 300K. I was wondering what type of loan would be required as it is above 4 units. Would I need a commercial loan or is there other options?

@Kacper Scheibe Yes, anything 5 units and above will require a "commercial loan". However, one common misconception is that these only come as balloons or ARMs but there are actually some great 30 year fixed options on small balance commercial deals like this right now. Up to 75% LTV.

Another option for that "little" of a multifamily deal, you could get private money.  Or, would the seller do a carry? 

Otherwise, obviously yes, you'd need a commercial loan.  Do you have previous experience in single family?  Before approaching the bank, know what it is you are offering them to lend on.  Come up with your numbers and also have the P&L's from the property, a 1-page bio, have the offering memo for them (if it was listed by a broker), Rent Roll, and a personal financial statement.  Often the bank can have a sample or a specific form they want you to put it on, but try to get a PFS that is not branded so that you can quickly and easily update that on each deal you have moving forward so it's easier on the process.

Also, with that low of a deal, you will probably have to find a local bank and often times a small community bank will offer the best terms.

Thank you for all the valuable information. I appreciate the detail @Justin Hoggatt . This is valuable information for me. I will definitely create a PFS. My parents have a few rentals they own. I just turned 23 and looking to purchase my first multi-unit. Was looking for a 4 unit, but came upon this 6 unit that has potential so looking at what needs to be done and options that can be considered!