2 Fourplexes and 5 Year Balloon

[Chad Kilgore]

Ok guys here's our current situation.....my partner and I are wanting to buy a couple fourplexes. We are both self employed but show very little on our tax returns. So a 30 year mortgage is going to be out. (We spoke with some lenders today). They did however say we could get a 5 year mortgage with a balloon payment then obviously we make a huge payment, sell, or refinance at the end of 5 years. Just curious what the general consensus is on these? 

My second question is we're going to need around 100k for a down payment we've got about half of that between the two of us. I was curious if anyone had a good strategy for raising the rest of the down payment? 

[Joel Owens]

Are the 4 plexes stabilized already or value add? Is there a pre-pay penalty with the loan?

You have to stress test the property meaning if you hold 10 years and in year 6 you need to refi what does the income stream look like then?

If a bank for instance gives you a rate of 4 percent fixed for 5 years they might use 6 as a debt constant and see if you are still at a DSCR of 1.25 or better.

Don't just go by the first lender you talk to. Check out credit unions. Some have great investor loan programs right now.