4 to 5 plex multi-family question

[Trae Swofford]

Considering investing in a 5-plex. Planning on living in one unit for a while. I hear rumor of how taxes and other things change from 1-4-plexes to 5 and above-plexes. True? Could anybody point me in a direction of info?

[David Krulac]

@Trae Swofford

financing changes. 1to 4 units are financed with residential mortgages, usually lower interest rates, fixed for as much as 30 years. Owner occupying a 4 plex is a great way to get in the game with as low as 3.5% downpayment FHA.

OTOH 5 and great units are financed as commercial mortgages usually higher interest rate and maybe only fixed for 5 years then adjustable.  And they may not give you any breaks for living there.

If just starting a 4 plex would be easier and better terms.

I have seen where a 5 plex was turned into a 4 nominal plex by opening a door and calling 2 units one unit for the day of appraisal and the mortgage application.  If after owning the property you do some remodeling that changes the number of units, that may be perfectlu legal, check with your real estate attorney