First time MF investor and out of state: is under-construction properties a bad idea?

[Karina Cao]

Hi BP Community, I am looking to buy my first multi-family property (6+doors) and I am wondering if buying properties that are currently under construction is too risky?  How are the risks different from buying existing properties?

Also, who should I use to help me structure seller financing?  A lawyer or will my broker be able to help me with that?  

Lastly, how much down payment (%) should I expect to pay in todays market for small commercial MF?  

A little background about me:  I have been investing SF on the side and currently have 8 rental properties.  Lately I became interested in MF.  My goal is to purchase my first MF within the next 11 months.  Also, I will be a long-distance investor.  I like the newer properties because I like to buy and hold and I simply do not have a lot of time with renovations and etc. at the moment.

[Mason Weiss]

Hey Karina,

Buying new construction is usually less risky but you are paying a premium for the freshness of the property. I would be surprised if any new construction would be open to seller financing as I have never seen that before.

You should anticipate paying 10-30% down in today's market for the numbers to start to make financial sense for your investment. 

I think 2-4 unit properties might be an easier jump from single family because you can still utilize traditional financing along with seller financing.