First Multi-Family Deal

[Skyler Wheeler]

Sorry for the long post, but following the template suggested in this part of the forums... I'm looking to make my first leap into REI with a small multi family deal that I have come upon. With this comes a litany of questions around the financing...

The property is an 8 Unit comprised of 2BR/1B apts.

It is located in Morganton, NC

I have spoken to a few lenders in regards to financing the purchase of this property and this is where I need some clarification and advice.

I have found a lender that will finance up to 80% of purchase price (20% down). My goal is improve the property once owned and increase rents up to market value as vacancies happen and then refi to hopefully get some of down payment back and repeat the process (BRRRR with multi). It seems that I can not cash out refi off of anything other than purchase price until after owning for 1 yr. I was hoping someone could clarify if this is accurate or am I just not asking the correct questions?

I do not own other rental properties(yet), only my house. I plan on using equity in current house as a down payment (HELOC unless anyone has other/better ideas).

The property of interest is full of renters.  However rents are below average (according to rentometer).  Property doesn’t need much TLC but with a little attention, rents could be raised closer to average.

 The purchase price is $320,000.  Current rents are $4500 and average of 2 BR, 1 B in that area is closer to $700.

I have a salaried job plus commissions that I have been in for 5+ years.  

My credit is between excellent and good.  Biggest issue is length of my oldest account (I’m 29 and have only had my house for 5 years so not a “whole lot” of credit history)

Biggest thing I’m looking for is recommendations/suggestions on loan types and then clarification for Cash Out Refi options.

Thanks in advance,

Skyler