Multi family investing questions

[Andrew Schafer]

I have never bought a rental property. I own my current home and am looking to buy another home to either rent this one or the new one. I found a multi family for sale and don’t know the best way to educate myself on how that process may work. Its 6 Units with 2 car garages. Total 18 bedrooms and 12 bathrooms. The postings don’t say unit sizes. But what are the places to look for financing? What down payment is required? I don’t plan on living in any of the units but that’s not off the table. Is there a recommended place for me to learn about multi family investing for beginners? 

[Tyler Fontaine]

If it's 6+ units it most likely will be a commercial loan that you will be accessing in order to purchase it. This process is different than residential mortgages. How they underwrite the deal is the major difference.

For financing they are usually concerned about the Debt Service Coverage Ratio. Basically what will be the total income on the property after what ever value add is done and does that cover the mortgage payment enough for them to take the risk and loan you the money.

Also, looking like 5%, 10%, and more commonly 20-25% down payment.

Get in touch with a commercial lender and a commercial agent. They will be able to guide you with more experience than regular residential professionals.