How to Finance Multi-Family Apartment - First Time/Mentorship

Question

Hi All,

My name is Kyle, and I will be relocating near a C-level area, where I will be starting to review multi-family apartments (4 units or less). I would like to understand what are some of the best ways to finance a multi-family property once the down payment is fulfilled; thus the extra cost associated with the property is needed to renovate for optimal rental status. Reason being, I have decent savings, but would not want to utilize every penny on one property.

Some background, I am a current renter with no current real estate deals, I will be acquiring my real estate license shortly.

Any input is welcomed. I would be much interested in connecting with fellow investors to mentor from and work within the tri-state area.

Thank you for your time,

Stephanie P. · Answer

If you're purchasing a "fixer upper" and want the lowest down payment (and you're going to live in it), FHA is the cheapest way to go.  Use the 203K program because you can fund the renovation through the loan.

Todd Dexheimer · Answer

There are renovation loan products available. They will lend at 80%+ of the purchase plus renovation. I would find a mortgage broker that deals with that. If your living in it, then you may be able to do a FHA 203k loan.

The other option is to get a line of credit on the house after purchase.

Todd Dexheimer · Answer

If it is 4 units or less, just get a conventional loan 30 year fixed. This should be easy, low interest rate and good terms. If you'll be living in it, then you pay be able to put less than 20% down.

Christopher Hand · Answer

Most 1-4 units buildings qualify for regular conventional financing just like a normal SFH, 5+ usually require commercial financing.

Will you be house hacking? As far as types of loans you can use FHA, low % down conventional w/ PMI, or a regular 20%+ down conventional removing the PMI.