5-unit property and what the financing would look like

[Andrew Medici]

Hey everyone! I wanted to ask the group a question that has been baffling me. You see, I have been looking for a small multifamily in Pittsburgh. I am familiar with the different financing vehicles involved and was set on something in the 2-3 units range. However I stumbled upon a five-unit property, which puts it out of range for residential conforming loans. Is there any way to get an idea of what the financing would look like and what the debt service would be on the property? I don't really want to waste time on it if it doesn't work for me but I am intrigued. 

Any thoughts on how to estimate debt service on this type of loan? Or any Pittsburgh-specific resources (or people) out there I can have a more casual conversation with about this before I get too serious?

[Ryan Murdock]

@Andrew Medici

Lately I've been doing 80% LTV loans - that means either putting 20% cash down, having the seller hold 20%, or buying with enough equity to satisfy the 20% spread.

Fixed 4.75-5% for 5 years, then prime + whatever after that.

Even if the buildings will support debt service with 10, 15, or 20yr amorts I've been structuring them with 25yr amorts in order to keep my DTI as low as possible on paper - gives me a little more borrowing power later on down the road. Doesn't mean I don't throw some extra cash at the principal every so often but it's nice to be able to decide each month whether to do that or use the cash elsewhere.