8 Unit MFU

[Bayo Badejo]

Hello BP members, 

We are looking at an 8 unit MFU for an asking prince of $419,000. A price per unit of $52,375 with a projected 7.47% Cap Rate in 2015 or projected 11.16% @ 100% occupancy. 

Right now 7/8 units are rented (I would still verify terms). The property is also located near a park. Property has 3 "newer" furnaces and 8 year old roof. Owner pays water and electric. Located 10 miles from downtown Cleveland in quite residential neighborhood. Property last transferred in 2008 for $480,000.

Could I use owner-occupancy financing and move into the 8th unit? 

What's the cheapest money I can use to purchase the property (i.e. FHA 203k)?

Would underwriting use the revenue generated from other 7 lease agreements to qualify the loan? 

Any other advice

Thank you!

[Federico Gutierrez]

You would be using a commercial loan. Residential lending does not apply to anything over 4units. FHA is out the door so forget that.

Bank will assess the building generate income and expenses and at the same time ask you for your W2's and assess your income. The joys!

Find an 8th tenant else the bank will give you some trouble over that. Where is the building located in Cleveland?