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Updated over 9 years ago on . Most recent reply

5+ Multifamily as Primary Residence?
I just spent about 10 minutes searching and didn't find an answer to this specific question so here it goes.
Does a bank look at a MF loan any differently if you make one of the units your primary residence?
I'm looking in an "A" area. The building has a decent income and just cash flows, but falls short of what seems like banks general stress test figures of meeting a 1.25 DSCR at a 6% rate (even though they'll finance at 4.25%) because the owner's price is too high. However, when I consider living there as a primary residence, the economics actually make it a much more attractive investment for me than a SF or even a smaller apt building.
It's a neighborhood I love and I could actually see expanding my portion of living space over time. The building is a converted mansion in a neighborhood of mostly SF mansions, and so there is always going to be a discrepancy between what it should go for as a MF because it has a very high value as a SF. Even though it doesn't currently meet the bank's numbers, I could basically live there for free - and so it makes a very attractive primary residence option. It's also a signifiant value property ($500K+) and the idea of having most of that paid off by other tenants is appealing. And finally, given that I often have to take long term projects out of town, it would be much easier to sublet my apt than a SF.
Will a bank consider the loan differently if it's a primary residence. If so, what kind of bank?
Most Popular Reply

Originally posted by @Barbara G.:
You do not list the price of the house. You do not list the current rents of the 5 apartments. You say nothing aout the renovation costs or the listed information on the house from Zillow.
How can anyone even know where to begin on a question that is so lacking in information
I'm sorry Barbara. I didn't believe that any of that info was relevant to the question I was asking, which is simply:
Will a commercial bank regard a properly differently if the buyer is using the MF property as a primary residence. It's looking like the answer is no...
* The section heading of this subforum stipulates that this is for commercial "anything 5+ units and over." I understand there may have been confusion when I assumed that others were operating on that understanding.