Looking for a RE to help with purchase of a multi-family rental property.

[David Rosen]

This will be a second home purchase for me, and I would like some help narrowing down listings and the ins and outs of multi-family home purchasing. I am a serious buyer, looking to buy within the next 3-6 months.

[Dan H.]

There is a lot to learn in MF but I will start with 2 categories of MF and their differences.

Residential MF is less than 5 units, are typically valued by comps (all the loans with best terms will value using this approach) and are not much different in the purchase process than purchasing a SFH.

Commercial MF is more than 4 units. They are typically valued based on NOI and cap rate. The residential RE agents do not normally deal with these properties. The loans on these properties are made mostly based on income of property and not income of the borrower (but borrower will need to show they can manage such an asset). The loan amount will be dictated by debt service coverage ratio (DSCR). because the cap rates are so low in San Diego, the DSCR typically eliminates high LTV loans. You likely will be challenged to obtain 60% LTV financing.

Decided which MF category You are looking to purchase will dictate agent to use, finance options, max price of asset.  this should be first step. 

Step 2 research your markets. Become an expert in your market.  Books, RE meet ups, conferences, Bigger Pockets.  There are numerous ways to increase your knowledge.  I think most gurus are over priced, but they are another option. 

I know the San Diego market fairly well: negatives: high cost of entry, low cap rates, poor initial rent to cost value, tenant friendly regulations and policies. 
positives: high appreciation, high rent growths (SFH rents increased $700/month last year according to core logic) lead to hood cash flow for long holds, prop 13 protects from large property tax increases, low vacancy means most tenants are good to great. San Diego has one of lowest delinquency rates and lowest eviction rates in the country. This is because an evicted tenant will have difficulty finding decent housing in San Diego. Similar for poor tenants will find it hard to find good housing. Add in the diverse and high income employment, some of the best weather anywhere, geographically constrained (west: pacific, south: Mexico,north: Camp Pendleton, east: quickly gets harsh.

San Diego is a good long term RE market with long history of producing great RE ROI.

Good luck