Advice for buying fourplexes with commercial loan

2 Replies

Hi BP,

I'm looking at a group of 5-fourplexes. They are individually parceled. And the owner will only sell them together.

If a bank is willing and able to do a commercial loan vs buying them individually, are there a foreseeable advantages or disadvantages from your perspective?
Are there any challenges I would face from an ownership or management perspective?

And if I were to acquire with a commercial loan, would these group of properties be considered a multi family? And would it come with the same "benefits" of owning a MF?

Thanks for your help and thoughts.

Andy Chang

I'm NOT an expert on this, so take my opinion for what it's worth, not much.  lol 

Don't the loans on commercial properties have a higher interest rate usually?  I can't recall, but I know there was SOME reason I didn't want a commercial real estate loan and I think that was it...or is there a balloon payment with them at some point?  You're better off asking your bank.

I'd think that because they are individual parceled, they wouldn't be treated as a regular 16 unit MF for tax or any other purposes.  In fact, I don't know if this would be a better or worse idea, but if there are disadvantages to having a commercial loan, consider seeing if they will give you 4 separate loans?  Just a thought.  

Good luck!


Advantages: one appraisal, one loan, one underwriting, one payment.

Disadvantages: may not be able to sell individually, commercial rates, shorter terms, bigger down payment required.

From a management prospective, if the units are all in the same area it's easier to manage. If they are spread out it's much harder. The type of loan doesn't make a difference.

As far as the benefits go, I'm not sure what you mean, other than taxes, depreciation,  etc. There is no difference,  the loan doesn't matter. 

Most large multifamily properties are comprised of multiple buildings. Some are on one lot, some on multiple lots and some like yours are on individual lots. 

Hope that helps.

Good luck, 


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