Financing on more than 5 units under $750,000

[Wesley Merville]

I've been trying to research how to get bank financing for smaller multifamily commercial buildings aka small apartment buildings - but it seems that Fannie Mae doesn't do it for under 750,000.

How do you finance these "inbetween" deals, above 4 units but before the million dollars?

Can I try for a jumbo loan like I'd get on a 4 unit when it's actually a 6 unit building?  What other options should I be looking for?

[Ashley Pimsner]

@wesley 

@Wesley Merville

I would consider local banks or credit unions in the area of buy and rehab and ask to speak with VP of commercial dept and ask about a portfolio loan the banks and/or credit unions carry on their books and do not sell to Fannie or Freddie.

Typically a portfolio lender will require arv (after repair value) or ltv of completed project to be around 70% and the DCR to be 1.25>.

If you are purchasing need to find out requirements for down payment.

If you don't understand these terms use the BP calculator and don't forget to input for vacancy and management fee.

The beauty of a portfolio loan is that the property qualifies not you with your dti's etc. and doesn't cap you with 10 units, however they usually require the loan to be in a business entity like an LLC.

Typically a portfolio loan is a 20-25 amortization but that varies from lender to lender so use shorter loan term in calculator.

Ask about loan seasoning, if they require net worth minimum, geographic restrictions, prepays, if they can refi in an LLC so it doesn't show up on personal credit report.

Hope that leads you in right direction.