Small Multi-Family Financing Strategies to scale quickly?

Question

The origin of this question is because I have two properties that are phenomenal deals.

One is $340,000 and is 2 units. The other is $400,000 and is 3 units.

I want to understand how I could acquire both with minimal down payments.

I am leveraging a 203k loan for the $400,000 property with 3 units. I want to understand what my options may be for the $340,000 property. It is a duplex. I understand that there are conventional 15% down loans, I want to understand outside of this if there are any lower down payment loans. I also plan on adding these units to Airbnb if that is helpful.

Thank you in advance.

Andrew Moore · Answer

For 2-4 unit multifamily properties, you are going to be looking for a residential mortgage. If you don't plan to live in any of the units (Non-owner occupied), 15% down will likely be about as low as you could go. Generally investment properties require 20% sometimes more.

If you plan on living in one of the units (owner occupied) then there are options for lower down payment financing.

My understanding is that 203k is a subsection of the FHA program. So you will be able to do a low down payment (3.5%), wrap the cost of the renovation into the loan, and then occupy the property when it is all said and done (as well as rent out the other units). Does this property require a decent amount of work? If it doesn't, I have seen more competitive programs that are closer to 5% down for owner occupied.

The second building you will not be able to claim as a primary residence, so this one will need to be financed either through a mortgage, creatively with private money, etc. If it is a good enough deal the money will follow.

Matthew Metros · Answer

@Anthony King - I clearly have no idea what I am talking about. Sorry for my misunderstanding!

Anthony King · Answer

@Matthew Metros where are you finding a 15% down, non-owner occupied conventional mortgage?