Best way to finance a 1st time investment in a multifamily unit?

[Vincent B.]

Your goals and story: What are you trying to accomplish, how are you trying to accomplish it, and what hurdles (if any) have you faced.

My goal is to slowly acquire multifamily units over a number of years until I am ready to trade up into apartments. I expect this will take the better part of the next 10 years to get where I'm able to retire from my day job, which is fine because I'm not in a hurry and not necessarily looking to make a quick buck.

I'm looking to acquire my first rental investment sometime in the next 3-6 months. I expect prices to probably drop some, and I also suspect some investors will be looking to shed properties to keep their cash flow healthy through this time, and maybe I can snag a decent starter investment in the process. "When others are fearful, be greedy" or something like that..

I've just started the research part of this process, contacted an agent and am reviewing properties on their MLS feed that match my criteria.

Since I'm so early in this process I haven't really hit any hurdles yet, but looking ahead I suspect the biggest issue I will face is the down payment (hence my post). 

Type of property: Single family home, manufactured home, RV/trailer, multi-family (specify unit count), mixed use (specify resi v commercial unit counts and approximate square footage distribution between the two), hotel, casino, mobile home park, other (specify).

Looking at multifamily, 3 or 4 units preferred but the right duplex might be fine. I actually found some decent potential ones already but they were 5 units and I recently learned on this forum that puts them into the commercial category, which brings a different set of problems that might be best for me to avoid on my first investment. 

Location of property: State at a minimum, county better, city would be nice, zip code if you're comfy sharing.

Looking in Metro Detroit area, probably in Oakland or Macomb County. Again, as an initial investment I think it makes sense to be close to the property and I know the intricacies of all of the surrounding areas very well which should help eliminate some variables. 

Purpose of financing: purchase, rate/term refinance, cash out refinance, upgrades/reno, construction, other (specify).

Purpose of financing is to be able to purchase a property. Not as worried about costs to fix the place up, I have plenty of available credit and use none of it currently. 

Type of financing sought: Not sure, Fannie/Freddie, hard money, private, seller-carried, subject-to, loan assumption, blanket loan, commercial, FHA, VA, USDA, 2nd position, SBA, fix-n-flip hard money, personal loan, HELOC.

Not sure what type of financing, which is part of what I'm looking to nail down in advance. I have a conventional mortgage on my personal home, no other real debt and great credit. Not sure what doors that opens/closes. Aside from my personal credit card lines, I have an LLC which has a couple of cards with unused credit cards and I get those promo business/personal loan flyers frequently. I generally ignore them, but if the banks are still offering maybe this is how I get the down payment? Not sure if that makes financial sense, would love advice there.

Current or prior ownership of real estate: Currently own other real estate (how many properties?), recently owned other real estate, have not owned any real estate within the last 3 years.

I have a conventional mortgage on my home, no investment properties though. Have owned for 10 years and refi'd a while back. Decent equity in the house, but refinancing my home to get the down payment would not be my first choice. Not looking to move though, so maybe it wouldn't kill me, but would like to at least see what my other options are.

Occupancy: investment with traditional long term leases, second or vacation home, owner occupied, family member (specify), short term furnished rental, rent-to-own, NNN, other (specify).

I might leave one unit open for family, which would obviously affect cash flow but I'm taking a longer horizon here. But this is why 4 unit would be preferable to 2 I think. I don't plan to live there though. I've read that you can get a lower down payment through FHA if you live there. Not sure if that's still true, and maybe if I do leave a unit open for family that could work by proxy..not sure what the rules are there.

Value of property at present and/or your offer price: $

Probably looking at something between $150k - $300k

After repair value: $

* See below

Anticipated or actual appraisal issues: no, yes (what?)

* See below

Current rents per month: $

* See below

Fair market rents per month: $

* I think these are all less relevant at this point, I don't have a particular property picked out and the price range I have is still a little dependent on what I can secure for financing. For now, I'm looking more for advice on securing the down payment with the least burden possible. For instance, if I know that all I can secure is $50k and will be stuck having to put 20% down, then I'll be looking to buy around $250k and will then have a better idea on rents etc for properties in that range in the areas I'm looking.

Down payment or equity: specify down payment for purchase mortgage, or how much equity you will have in the property afterwards if a refinance.

At this point I am working under the assumption that I will need to do a conventional mortgage with 20%. I'm hoping there are better options and this is what I'm looking for advice on.

Source of down payment funds, if applicable: own funds, unsecured borrowed funds (credit cards), secured borrowed funds (HELOC, etc), gifted funds, other (explain)

Not sure yet. As of now my two most obvious options are refi my personal home and use equity from that, or take up Chase/Capital One/HSBC etc on their constant offers for a personal/business loan. I would imagine  my rate would be higher if I go that route and I'm also not sure if that would affect my ability to get approved for a 2nd mortgage..

Income Source: Salaried/hourly W2, 1099 independent contractor (what industry and how long?), it's complicated, student, self-employed (what industry and how long?), financially independent as a landlord, career tenant/victim that sues landlords for discriminating against my emotional support chickens, retired, other (explain)

I am salaried and work in an industry that is hopefully going to remain in demand, but you never know. This is all new territory. 

Gross monthly income (optional): $

:|

Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc: $

Mortgage and a trivial amount left on a car note. I use credit cards but pay them off in full every month and have for years.

FICO: Excellent, good, ok, bad, you don’t want to know, not sure.

I'm well into the 800's.

Credit issues: Late credit cards, thin/no credit, Ch7 bankruptcy, Ch13 bankruptcy, foreclosure, short sale, etc, and how long ago the event was.

None.

Additional details:

I think that covers it. Really looking forward to the sage advice I can get from the experts on here, and appreciate you taking the time to help a newbie out.