5 unit as a Residential loan? Help!

[Sergio Palmero]

Hey guys Im trying to buy a multi family property but it has 5 units. I have no interest in getting a commercial loan, any way I can a residential loan. There a two homes on the lot, one is a duplex the other a triplex. Please let me know what I can do here guys!

[Corey Hawkinson]

@Sergio Palmero Hopefully you’re involved with a few local real estate investing groups. Ask there (or here) for local commercial banking recommendations. Ask them what it takes to get a small commercial loan for something like this. Typically there is a lot more variation in what is needed to qualify so talk to a few banks. The loan will be very similar to a residential but will likely have 2 differences:

Shorter amortization of either 20 or 25 years instead of 30.

A rate reset period, or balloon, after 5, 7, or 10 years. Most banks don’t actually expect you to pay the balloon. At that point you will refinance into whatever interest rate is the market rate at that time.