Multifamily (2-4 units) strategies in today’s market?

[Allen C Herring]

I'm looking at purchasing a multifamily home 2-4 units. I'm in the Air Force so I wanted to utilize my VA loan which allows 100% financing but the catch is I have to live in one of the units. In today's market the prices are high, amount of sellers are low, and it's hard to find a property that I can buy under market value especially in an area where there isn't a lot of properties on the market. I almost had two good deals for prices under market value that were cash flowing even though I was living in one of the units. I ended up getting out bid and lost out on it and my question is would it be smart to start offering a number closer to market value as long as the cash flow is good and the property is turn key or Keep trying till I find one under market value for appreciation. Currently I'm at a stand still because there aren't any 2-4 units for sale. HELP PLEASE

[Bill Plymouth]

I always advocate for under market value purchases. Find a seller in distress who can work with your VA loan. They may be fewer and more far between than people who would accept cash, but I'm sure they are out there.

I know you want to use your VA loan, but explore your options. 100% financing is awesome, but will they fund the purchase of a property that needs substantial work that you can buy below market value? Look into the FHA 203k loan. It allows you to purchase properties in disrepair that the average loan wouldn't finance. They also wrap the cost of rehab into the purchase price. The biggest issue with this loan is that you have to use a HUD approved contractor. You can't do the work yourself. A big pro of this loan is that you will have equity in your property almost instantly (if you buy right).

You should be looking off market.  If a seller has no motivation to sell under market value, then they will not sell for under market value.  Send some mass mailers out to everyone who owns a small multi family unit explaining what you’re looking for.  You might get a hit that way.  

Post some Facebook statuses and message all your friends letting them know that you’re looking to buy a small MF unit.  You never know who someone knows.

Have a criteria and a price range in mind and stick to it.  DO NOT over pay.  Some of the best deals are the ones you don’t do.  Keep firm and sift through the trash to find a gem.

Lastly, deals are created, not found.  If you can help someone solve a problem, you will usually create a deal.