How to buy $1 million multi family units

[Tou V.]

How would I buy a $1 million MF unit if I only had around 250k? Is it even possible? How are people funding all these 1mill + units? I contacted a couple lenders, but they've just been giving me the run around. Do I need to save up more $$? I'd really prefer to buy one large unit then multiple smaller units. Any advice?

[Leon D.]

Tou V. Do you have an idea or indication why the banks are giving you the run-around? A 25% down payment is more or less on the money, you might need 30% depending on the property (market, size, condition, etc).

Regardless of the building being three units or 100, you won't get anywhere by just walking in and asking for terms. Have a package ready. For starters, a resume and personal financial statement with back-up (bank statements, tax returns, etc).

Next, and most obviously, you have to have a specific property in mind and ideally have an executed LOI (purchase agreement with the usual financing contingencies even better). Banks, like courts, don't like thinking prospectively or hypothetically, they like dealing with concrete issues and problems.

The bank will want to know the final purchase price, NOI, DCR, etc, and they can't know any of that if you just ask about a loan on some building you drove by and are thinking about maybe kinda looking at next week. They need rent rolls, copies of maintenance contracts and leases, tax and utility bills, historical P&Ls and everything else you would have asked for during due diligence before you made an offer or during the contract DD period.

A loan is a business deal. If you want the bank's money, show them that you respect their way of doing business.