Current Mortgage Rates - Small Multi-Family

7 Replies

Hi All, I'm a newbie to the REI world and I'm interested in starting my investing journey in the small multi-family (2-4 units) universe. My question is around current mortgage rates. The mortgage broker that I've worked with on my primary residence provided me with the following for small multi-family investment properties.

30 yr Fixed mortgage: 4.75% w/0.75 points with 25% minimum down payment

I did not have a specific property identified, but I wanted to get a baseline mortgage rate to use when analyzing properties. a Few questions:

1) how much does the specific property (assuming they are all small multi-family in this case) impact mortgage rates? By this I mean the condition of the property, the location of the property, etc.?

2) Are the rates that I posted above what others are typically seeing in the marketplace for a credit score close to 800?

3) besides a traditional mortgage broker, what other sources do you recommend using to find lending? Do you recommend calling individual banks and credit unions in addition to using a mortgage broker? If so, how important is it that these institutions be local to the property in question? Which online lenders have people had good experiences with (i.e. Better.com) and what are the pluses and minuses of these lenders vs traditional lenders?

Any other advice regarding financing from more experienced investors would be very much appreciated as well. Thank you in advance for your help and advice.

Best,

Aaron Funk

Yes, 4%-5% is common. on the conventional side rates will continue to rise from here on out. They have changed their guidance on investment loans. No more free ride. You might as well go with a private mortgage company as the rates are the same if not better and you don't have them turning over every stone to make sure you fit a box like a bank does.

What you have quoted is very close to what we are seeing after talking to many local lenders. I think it will be very hard to find much better than that these days. We are in contract for a small multi family, 10 year fixed at 4.75% amortized over 20 years. This is a commercial loan since we are purchasing through our LLC.

Thanks for the reply Matt. Do you have any private lenders that you can recommend?

Originally posted by @Matthew Crivelli :

Yes, 4%-5% is common. on the conventional side rates will continue to rise from here on out. They have changed their guidance on investment loans. No more free ride. You might as well go with a private mortgage company as the rates are the same if not better and you don't have them turning over every stone to make sure you fit a box like a bank does.

 

@Aaron Funk Following......funny you just posted this today as I came on BP to ask this exact question.  Currently trying to get pre-approved through a mortgage broker and I am already frustrated. We are intentionally keeping our income low this year but have several hundred thousand in cash. More than enough to pay cash for the property price ranges we're looking at but we want to leverage the cash to buy multiple properties. They seem to not even consider that. They are strictly looking at our income and now want to see our business tax returns.
(we're self-employed in an industry not related to RE) . I feel like a private lender might be so much easier to deal with but don't know where to start other than random googling. 

I don't have a specific property yet. I live in Massachusetts, but am looking both in state and out of state. I needed a starting point for mortgage rates to do my deal modelling. from your experience, should the interest rates vary much by geography or are they relatively uniform?

Why not go with a DSCR loan put less down and get similar rates?

Yes, rates will be very comparable across the country.  Location plays a role that may impact .125% to .250% but not usually much more than that.  

Non-agency loan rates are running very close to agency rates. As you noted in your post, 4.75% for an investment NOO isn't a great rate for a conventional loan. Especially with all the docs and work that will go into.

I quoted a DSCR last week for 4.875% at 80% LTV on a quad-plex. No points. No employment history, no income requirements, and no DTI restrictions. Credit Worthiness and the property cash flow is all that matters to qualify.

As far as credit scores go, once you get a MIDDLE score over 780, you don't gain anything.

Keep in mind.  Better.Com and other online sites will show you really low rates to lure you in.  Once you get into the details, they are having you pay down rate with points... usually a lot of points.  Don't be fooled.  I am a mortgage broker and am bias.  We simply offer too many positives to not use one.  One credit pull, we do all the shopping among a huge network of lenders and programs for you, we educate you on everything about the loan terms (well, the good ones do anyway), etc... I am paid by the lender not by the borrower, so there are no broker fees in your CD.  

I'd gladly run numbers for you, if you'd like.  Just let me know.

Happy Hunting!