Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Multi-Family and Apartment Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 4 years ago on . Most recent reply

User Stats

47
Posts
16
Votes
April Eilers
  • Investor
16
Votes |
47
Posts

How to Secure Loan for 5-Plex

April Eilers
  • Investor
Posted

Based on my research, and what I've heard from numerous lenders, a 5 unit home is classified as a commercial property, and can only qualify for commercial loans. Is this understanding correct?

So far, the only bank/lender we have found that offers loans for this type of property has unfavorable terms. They do not offer long term fixed rates on commercial property.

Do you have any advice on who does offer more favorable terms for 5 unit residential (i.e., commercial)? I am looking for a 30 year fixed rate loan with a reasonable APR. Ideally a 20-25% down payment.

Most Popular Reply

User Stats

198
Posts
163
Votes
Michael Albaum
  • Rental Property Investor
  • Petaluma, CA
163
Votes |
198
Posts
Michael Albaum
  • Rental Property Investor
  • Petaluma, CA
Replied

Hey April, you nailed it; 5+ units = commercial property and thus commercial lending. Every single lender I've worked with for commercial lending, they only offer fixed terms for 5 or 10 years with 20 or 25 year amortization periods. Making the leap into the commercial lending space is often a rude awakening from the residential space since there is seldom long term fixed financing available. Obviously, if you come across a commercial lender that will give you the same type of mortgage product as a residential lender, then let me know who it is as I'd love to use them as well!

In the commercial world, lenders know that it's purely business in that the units will be rented out and usually on 1 year leases. As such, they assume there is more volatility and your cash flow will not be as stable as compared to an owner occupant living in a SFR. Best of luck!

Loading replies...