Small farm and teacher wanting to add small multifamily

Waco, Texas
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Small farm and teacher wanting to add small multifamily

Brent JohnsonPro Member
Member since 2026 · 2 posts · 0 votes

Hello! My wife and I have a small family farm in between Dallas and Waco. We are wanting to add a small multifamily property and grow from there. We are trying to figure out the best way to finance. We have equity and retirement but not sure where to go from there. We've researched loans but keep getting mixed advice on the best type of financing. Any help would be appreciated. At the moment we're thinking a HELOC and DSCR, however some advice has been to take a loan against retirement holdings but we've also been told that's illegal. Thanks for any direction or ideas we can investigate further.

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  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 503 votes
    3h

    I would first want to figure out if the property was in a rural area as that will affect lending options. This is usually determined by how many people are in the local population. Also, if the zoning will allow for a small multifamily to be added. From there, finding out what the permitting process is if it's allowed.

    Sometimes real estate investors don't find out about items like these and then that can affect their profitability. I have worked with real estate investors who had to tear down their units when the rules in their local area weren't followed.

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  • Hossein Sharifi
    Member since 2023 · 15 posts · 5 votes
    1h

    Start with zoning and rural classification before you pick a financing product, because those two gates kill more deals than rate does. A HELOC can work as a short bridge if you have a clear refi exit, but I'd underwrite the multifamily on its own rents and reserves rather than leaning on farm cash flow. On retirement money, a 401(k) loan is very different from a prohibited IRA transaction, so get that from a tax pro first. Once you know the site can hold units, shop DSCR vs. conventional with a lender who does rural small multifamily regularly.

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  • Brent JohnsonPro Member
    OP
    Member since 2026 · 2 posts · 0 votes
    1h
    Sorry, let me clarify. Looking for an existing one for sale within an hour or two from us. (Waco, temple, Killeen) There are universities and military bases in those cities.
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