Funding for an 8plex

[Heather Mikel]

For my next deal I am looking to purchase an 8plex. So far the best fixed financing I have found is a 5 year mortgage. The purchase price is $500,000 in Texas. Does anyone know of any mortgage brokers that offer a 20 or 30 year mortgage on this type of property? To keep my COC return high I of course will want to put as little down as possible.

Lenders, you may be able to shed some light on this, what I cannot understand is how a $500,000 multifamily property with secured leases and history of positive cash flow is so much "riskier" than a single family home of $500,000. (Assuming the buyer is well qualified.) In the multifamily scenario, the mortgage is paid via the tenants and shows cash flow profits besides, and in the single family home scenario the mortgage drops the buyer's income after expenses significantly. So why is it I am readily approved for a loan on a residence for $500,000 but am having difficulty finding funding for $500,000 for the 8plex, which is providing income rather than taking it away? Is it simply because the market for these types of loans are so much smaller?

The second issue is, with single family homes I have been purchasing as a personal investor, for something bigger like this, should I be looking at purchasing under an LLC?

Thanks so much in advance for your thoughts and feedback!