Residential Financing On A 4plex?
I have $40K in 1031 exchange and am planning to buy 2 4-plexes at around $200K each. What would be the best way to finance it?
I was planning to have interest only loan to have the flexibility on my payment in case of vacancies. Any suggestions?
How do you get a residential financing on a fourplex?
How long do you plan on owning it? I'd lock in a fixed rate for at least that long. Rates aren't going to be lower when you have to refinance later on. Your payment will go up once they do when rates do start to climb. Sure it costs a bit more in the mean time, but if you're going to own it for 30 years you'll save thousands over the course of your loan.
That makes sence for the longer term, but does not get me in the positive cash flow now.
Make sure you have a game plan before you decide what type of loan you 'll get. Once you decide how long you plan to keep the property then it's easier to pick out the loan type that best suit your need.
Good luck on your 4plex.
Sam
BTW, financing on a fourplex should be the same as SFR. It has the same underwriting guideline. Anything more than 4 units is consider MDU and have different guideline.
Hope this help.
Sam
Thanks for your advice. That's what I thought, too: the same as SFR, but after talking to few lenders.. 80%LTV is what they offer on a 4plex.
Hi there. 20% down payment is normal for an investment property unless you have a great credit and alot of reserve. lenders also look at your overall debt to income ratio. Even if you buy a SFR, alot of lenders want you to put more downpayment because it is an investment property. Make sure you get a good mortgage broker if you want to put less than 20% down. I am sure you can put less than 20% down, you just have to shop around.
Sam
If your lender wants 20% down for an investment property I suggest you find a different lender. Honestly the 20% guideline is not practical for most investors. I've got a lender that will do non-owner occupied for 5% down and there's no mortgage insurance. You're gonna pay a little more in interest but IMO it's worth it. Find another lender - the programs are out there.
Ryan J. Schnabel
In response to rjs9352, can you still get good rate/terms if the rental property is to be in an llc? :-o
In response to rjs9352, which lenders allow you to buy investment property at 5% down? Countrywide allows that up to a 4-unit building here in MA. Any others?
Are there special down payment assistance programs available for 4plexes (like what is available for single family)?
What if you find a 4plex in foreclosure, will a bank be more willing to negotiate on the lending requirements/terms? (possible to short sale?)
From my understanding - and I'm not an expert in apartment buildings by any means - anything 4 units or less is done as a residential loan. Anything 5+ is a different beast. A mortgage broker I've come to know has a program as I described in the previous post. One kicker to the program is that for some reason you cannot be a realtor or mortgage broker if you want to qualify for the loan. There were actually 2 mortgage brokers I know who can offer this financing. If you'd like I can find out who the actual program is with. Just say the word.
Ryan J. Schnabel
I would be very interested in getting info on the financing of 5+ units.