4 Duplexes (8 units total) Considered Commerical or Residential?

Question

Hello! I am a newer investor and considering a deal purchasing 4 duplexes. My understanding is that duplexes, tri-plexes and 4-plexes would be financed as residential loans with the bank. Would that still be the case when the total unit count is 8 (4 duplexes), or would I be required to do a commercial loan? I am meeting with my banker to discuss the loan options and structure, but wanted to know in advance whether to expect a residential or commercial loan. I will not be living on the property. Thanks for the assistance.

Richard Elvin · Answer

I'm new to this, so anyone feel free to correct me. I believe most banks would consider each duplex a separate property and require a loan per duplex. Some local banks will do portfolio loans though, where they loan for the whole "portfolio". These lenders have their own underwriting and loan their own money, or so I understand. You may have to call and ask them if they do portfolio loans because they don't always advertise that.

Bethany Spinks · Answer

Thank you for the helpful feedback! I believe they all  have a separate parcel number, but I will definitely confirm that with the county.

In these types of deals will the bank typically do one loan that encompasses all 4 duplexes or would I have to do a separate loan for each one? The seller wants to sell them all together...so perhaps that is my answer.

Andrew Johnson · Answer

@Bethany Spinks I would second what @Harjeet Bhatti is saying and recommend that you hope on the county's assessor site.  You'll be able to see if they each have a unique APN (assessor's parcel number) or if there is a different situation.  However, if those 7 properties already and you want to add 4 duplexes you might be running up against limits on conventional loans.  Since you're a newer investor, I doubt that's the case, but you never know.

Harjeet Bhatti · Answer

That will come under residential units. Each  duplex should have different parcel number.