Best Financing options for a MFR

[Erik Joseph]

Hello All, 

I am a rookie and have 3 doors in Los Angeles that flow nicely and have built up quite a bit of equity. I'm looking to add a duplex or triplex in Los Angeles but running into high-interest rates and large down payment requirements. My previous properties were owner-occupied then rented out so very favorable loan terms hence the good flow. I plan on a cash-out refi on both properties for the down on the next purchase; does anyone have tips or resources to put as little down on the next purchase as well as keep my current loan terms as intact as possible? Specific Los Angeles experience would be super helpful.

Thanks All

[Clarence Johnson]

As an investment there is no way around the large down payment and rates will vary lender to lender. I always advise my clients to explore a HELOC before a cashout refi, origination is less, HELOCS can be reused once paid, and if you wont have to take the rate hit that comes with a cashout refi. The aforementioned totally depends on your scenario; what rate you have now, are you paying MI etc. Your best bet may be to explore building an ADU on your existing properties, or to buy a SFR and build 1-2 ADU's. Going from a multi to a SFR/Condo the bank will allow you to buy with a 3-5% downpayment. I'm getting quoted to build an ADU now using my HELOC, the ROI is amazing in comparison to the cost to buy in my mkt (Inglewood). The numbers for a SFR with ADU are penciling about the same as a duplex in most LA markets, my client just purchased a 3/1 SFR with a legal studio ADU in Carson for $595k, this is comparable to duplex prices.