What type of loan product is best for 1-4 units?

Question

Hi all!

I'm a long time podcast listener posting for the first time. I live in San Diego CA and want to invest in rentals in my neighborhood. There are several in my neighborhood fitting the description above. I don't have the capital available to purchase on my own so I would need a loan. In some cases that loan should include rehab costs.

I am looking for suggestions and advice on the types of loans best suited to buying and holding single family homes with at least one additional unit on the property and/or 2-4 unit 1-2 bedroom cottage style units. I'm guessing it would be a shorter time private money loan that I would then refi into a traditional loan? A BRRR type loan? I would be holding onto the properties and renting short term to traveling nurses specifically.

If there's anyone in San Diego currently doing this I'd love to talk with you. I've attached an example listing below.

Thanks!

Kico

Twana Rasoul · Answer

@Kico Mendoza you can purchase a 2 unit with fha (not 3 or 4 unit due to Self sufficiency rule) and put 3.5% down. If you wanted to go conventional it would be typically 15% for 2 unit and 25% for 3-4 unit. I’ve done these deals myself as well as for investors.

Best of luck!

Kenneth Donaghy · Answer

@Kico Mendoza @Yezenia Hernandez - @Twana Rasoul is correct. as well as @Nicole Holcomb on the loan limits for SD County, yet that doesn't include the amount of reserves the lending institution may require.

Before going to deep, it best to speak with a preferred lender on what's realistic

Nicole Holcomb · Answer

Hi Kico Mendoza, will you be using the multifamily property as your primary residence? If not you will most likely need 20-25% for the down payment to qualify for a conventional loan. My preferred lender can go as low as 5% down on a conventional loan as a primary residence. If you are going to go this route keep in mind the limits on conforming loans. According to www.loanlimits.org the conforming limits are as follows for 1-4 unit properties in San Diego County.

SAN DIEGO

$701,500

$898,050

$1,085,550

$1,349,050

Start talking to lenders now to get an idea of their requirements, you may be able to go conventional and take advantage of the historically low interest rates.

SAN DIEGO

$701,500

$898,050

$1,085,550

$1,349,050

Start talking to lenders now to get an idea of their requirements, you may be able to go conventional and take advantage of the historically low interest rates.

Yezenia Hernandez · Answer

I'm a nurse and thinking about this model for the future. I've worked with a lot of travel nurses and they all have a hard time finding accommodations because of their pets. This generation is very dog-loving.

Twana Rasoul · Answer

@Yezenia Hernandez just doesn’t work in our market due to self sufficiency rule. It is possible in many other lower priced markets however.

Yezenia Hernandez · Answer

@Twana Rasoul is that something new or only with certain lenders? I'd always heard and read that FHA loans can be used for owner-occupied 1-4 units.

What type of loan product is best for 1-4 units?

What type of loan product is best for 1-4 units?

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