Financing For Multi-Family Properties
I am looking at buying a Multi-Family property. Becuase of financing, I had restricted myself to Four units or less. Now I am finding that the better deals are in the 5 units and greater properties.
My broker who I have worked with on many SFH, says he can do these 5 (or larger) units with bigger downpayments but does not seem to have a lot of details when I ask about specifics.
I have a number of questions and plead for indulgence as I list them as follows:
How difficult is it to finance multi family units greater than 5?
Do the lenders consider the income from the subject property or does the buyer have to qualify to make the payments on their own income only?
What is the best way to get the lowest downpayment financing?
Are there any lenders out there that specialize in this type of finacing?
Is this financing considered to be commercial type financing?
Is it better to go through a broker or to go directly to the lender for these types of loans?
Any advice you can share is much appreciated.
Thanks.
JS.
How difficult is it to finance multi family units greater than 5? Not difficult once you find a great deal.
Do the lenders consider the income from the subject property or does the buyer have to qualify to make the payments on their own income only? Depends on the property. I am sure that the lenders look at the DSR.
(Debt service ratio)
What is the best way to get the lowest downpayment financing? A broker may have several lenders. I received a 90% LTV on a 14 unit.
Are there any lenders out there that specialize in this type of finacing? Yes.
Is this financing considered to be commercial type financing? Yes. Anything over 4 units is considered commercial.
Is it better to go through a broker or to go directly to the lender for these types of loans? I always use a broker for they have many lenders as contacts with various terms.
I actually no of a bank that offers rates lower than that. Is the loan recourse or non recourse
FYI: Commercial loans interest rates are in the 10%+ range, and oftentimes come with pre-payment penalties of about 5% for an initial term period.