7 unit multi family house with tenants in all units

[Tyler Vogt]

This is a great deal and I’m trying to find a way to finance it. This is my first commercial deal so I’m still learning how it all works. My brother and I have enough for 20% down payment. Or should we go hard money and keep our cash for other properties?

[David Brent]

Avoid hard money.  Consider it a loan of "last resort".  Have you contacted a banker who will provide a loan for you?   I doubt it, since for your first property, I am certain they will only be lending 65-70%, which means you need 30-35% for your down payment. 

And you typically only go for "hard Money" when no bank will lend to you. And if that is the case, its either because the bank doesn't like your personal wages and finances, or they dont think the property can provide enough income to cover the mortgage payments (typically want NOI/loan servicing) to be 1.25-1.5x.) This is called the Debt Service Ratio.

Hard money lenders lend based on collateral securing the loan, and they are less concerned about your ability to repay. If anything goes wrong and you can't repay, hard money lenders plan to get their money back by taking the collateral and selling it.  You DON'T want that happening on your first deal.  They also have shorter terms 1-5 yrs, and charge higher interest rates, and they ALSO ask for a down payment - typically 10-40%... so I don't know why you think you could "save 20%" down payment to look at other properties.  

read this:  https://www.thebalance.com/har...

My advice - SLOW down, do a lot more research before going after this 'deal'.