Real Estate Agent · Brooklyn, NY · Member since 2017 · 88 posts · 14 votes
Hello BP Investors,
I am currently in a situation where I am looking to pull money out of one of my investment properties to put down as a down payment on something bigger.
Being in Brooklyn and the expensive market here, I am looking in Union City/ West New York area.
My property is free and clear and worth approx 350-400k atm. My thought was to take out a mortgage against the property for about 250-300k and invest that money in a multifamily 3+ apartments up to 750k-800k.
My questions is regarding lenders, for this type of investment what lending bank would be your primary go to? Or should I just shop around at both smaller and larger banks?
Thanks you!
Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes
9y
@Milan Obradovic Assuming you're talking about a lender for the new deal, at this size deal, you are still looking at residential mortgages, rather than commercial ones, which start at 5 units and larger.
Community banks in the area of the property are always a good place to start on small projects like this.
Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes
9y
@Milan Obradovic Assuming you're talking about a lender for the new deal, at this size deal, you are still looking at residential mortgages, rather than commercial ones, which start at 5 units and larger.
Community banks in the area of the property are always a good place to start on small projects like this.
Real Estate Agent · Brooklyn, NY · Member since 2017 · 88 posts · 14 votes
9y
Jonathan Twombly Hey Jonathan, yes it would be a residential deal. 3-4 units is what I am looking for ideally. I forgot to mention that what I have now is a CO-op and I found out that for example Wells Fargo will not give out a mortgage or cash refinance for a Co-op. Any idea who might without going through private lenders? Thank you
Columbus, OH · Member since 2015 · 210 posts · 80 votes
9y
"250-300k in a multifamily 3+ apartments up to 750k-800k". I would use that $300k as 35% down payment for an apartment building with more units, then you would apply for a commercial loan in that case.
Real Estate Agent · Brooklyn, NY · Member since 2017 · 88 posts · 14 votes
9y
Jessie Niu hey Jessie, I am in the provess of seeing how much I can pull out and secure and from who. If I amable to get 300k at the rate I am looking for, I would look into larger properties, in my area a 6 family is between 1.7-2mil.
Jonathan Twombly Hey Jonathan, yes it would be a residential deal. 3-4 units is what I am looking for ideally. I forgot to mention that what I have now is a CO-op and I found out that for example Wells Fargo will not give out a mortgage or cash refinance for a Co-op. Any idea who might without going through private lenders? Thank you
Make sure that your co-op board will agree to whatever you are doing as well. Usually board approval is required when you refinance your mortgage.
Developer · Houston, TX · Member since 2017 · 161 posts · 134 votes
9y
Assuming you can get the Co-op leveraged up like you would want, the cash flow would be crap under the new loan. Why not just sell it? If you are able to get a loan, I would bet your leverage would only be 50-60%, so you are looking at 150k -250k. net of fees. I would sell.
Developer · Houston, TX · Member since 2017 · 161 posts · 134 votes
9y
Oh, and regardless of what scenario you go, find you a quality syndicator in your market. Somebody with a track record and testimonials. You don't want to buy a small MF property. Those are the hardest to operate.
Investor · New York, NY · Member since 2017 · 7 posts · 11 votes
9y
Hi Milan -
Ugh. I hate co-ops and their boards of old, dumb busybodies who can't add 2+2.
How much is your monthly maintenance fee at the co-op and what are the Board restrictions on rentals? NYC co-op boards are draconian and are normally severely restrictive with rentals. But you mentioned that the co-op is an investment property and not your primary residence so do you have some sort of permission to rent it indefinitely?
I agree with Joseph Bramante. Since you would be withdrawing practically all the equity from your co-op, why don't you just sell it? If it truly is an investment property could you do a 1031 exchange to defer capital gains and have even more cash in hand for a down payment on a multi-family?
If you don't live in the co-op why don't you buy the multi-family and then house hack one of those units?