What do you wish you knew about multi family 4-12 units BEFORE?

[Tiamo Wright]

I am very interested in buying a multi-family, specifically between 4-12 units. I mean who isn't?! I love the idea of the economies of scale with this route versus my current single-family rentals. I can imagine that tenant issues become something more so that I would be running into, but is there any sage advice you wish you had known that you are willing to share?

[Jeff Copeland]

There's plenty of free sage advice here on BP if you spend some time exploring the forums, bookstore, podcasts, etc. 

It struck me that 4-12 units is an odd range. One of these things is not like the other. 

2-4 Units = Residential property for financing purposes

5+ Units = Commercial property for financing purposes

You might consider spending some time exploring the difference between residential and commercial financing options, and researching/interviewing lenders and loan product options for both. Then you may end up with two different sets of search criteria, for example:

3-4 Unit Properties in a certain price range/location/property class (which will require a relationship with a residential lender), or

5-12 Units in another price range/location/property class (which will require a relationship with a commercial lender, and possibly even a different real estate agent/broker, depending on your market etc)

Having both options lined up in advance will allow you to pull the trigger on either if/when the right deal comes along, rather than having to start from scratch if one piece is missing.