Financing small multi-family with low money down

[Kyle Soderman]

As far as I have found with my research, there are not any lenders who are doing low down payment options for non-owner occupied 2-4 unit properties. If you have found financing like this, please let me know!

I do not want to go hard money as the properties I am looking at do not need a ton of work so there is not much equity to be built in for refinancing. The other option I have found would be owner financing. The problem I find with that is owners typically want large down payments as well.

Anyone with any other ideas?!

[Tim Swierczek]

@Kyle Soderman if you exclude seller financing because of its property specific, so you can't do it across all properties then you are left with Conventional, and portfolio options.  Conventionally is simple, 25% period, does not matter what lender you go to its a national guideline for both Fannie Mae & Freddie Mac no lender can write a conventional loan and deviate from this guideline.  Here is the link to Fannie's documentation (page 2) https://www.fanniemae.com/content/eligibility_info....

As for Portfolio that is where it gets interesting.  The majority of commercial (local) banks live on this type of lending.  With some rare exceptions they require 25% down, there are a few that will do 20% down, but I recently called one and they flat out told me they were not doing 20% for new customers only existing.  You needed to have at least one 25% down loan and a checking account with them to consider 20%.  These lenders have good rates, terms vary tremendously, and they are balloon loans in all cases.

There are some national portfolio lenders that will do less of a down payment.  We have relationships with a couple of these lenders.  One offers 80% Loan to value, the other I believe offers 85%, however, I just looked for the documentation and could not confirm that tonight.  These lenders are noticeably higher priced, but they do not have balloons and they offer 30-year terms where you will mostly find 20-25 years in the commercial banking world.

All of this leads to house hacking as the best first few transactions, unless of course, you have access to more investable dollars than most new investors.