Purchasing A +5 Multi-family
Is it more difficult to finance +5 unit multi-families versus 2-4? The reason I ask is there is a booming area where I live with million dollar developments up and down the street. The rental market in the area is great, rents are high, and there are always a high demend for tenants. However, the only property that I own is my house. The asking price for this 7 unit property is 500k, gross income is 50k a year. My credit score is above 700 along with my buddy's who I would be going in on this with. The other draw back is available cash. Even if we got it for 450k, a 10% downpayment would be tough.
I guess I'm wondering about the feasibility of such purchase. Would they consider this a commercial loan and judge it based on the rental income?
How would a newbie go about purchasing such a property?
If you were looking for 100% financing on investment property, it's easier to get it with residential properties (1-4units) and even then, it may be hard to get 100% NOO for more than 2 units, especially if you needed to go stated.
With your credit score, you can get 95% LTV if the seller will take a 20% second. All you would need then is 5% down. You can roll the closing costs into the loan, add seller's concessions, and have the seller reimburse you for a portion of the closing costs, and get some money back at closing. The seller could just sell his note and get money for it right away instead of collecting payments from you.
Just my two cents. If you'd like, I'd be more than happy to discuss this further with you.
Sincerely,
Amy Cheng
Real Estate Investment Analyst & Consultant
How does the seller sell the note right away? Is there a market for these small loans? Who buys them?
Thanks.[ Edited by Fishbowl1 on Date 01/31/2005 ]
5 or more units would be considered commercial. The lenders would be looking to see if the property will cash flow or not. I also have some lenders that will look at your DTI. I also have some programs that are 90% CLTV. If we can be of any help to you please feel free to contact us.
There are programs out there for 100% finnancing for owner occupied. If you go full doc. the income has to be there. If there is no income you need to show in the bank about 20K to 25K. Example: My partner and I bought a 3fam in Paterson, N.J. 100% fin. and with a 10K sellers concesion. The purchase price was 355K we applied for 365K. My partner need to show 25K in the bank, his credit score is 690, he stated he will be living in the house, and the 10K went for closing cost. Out of pockect expense was $2,225 All this can be accomplish as a first time home buyer. Hope this helps. Also, I can direct you the person that made this happen for us.
Respectfully,
James