Financing Your First Deal

[Jose Furman]

Hello All!

My family and I are planning on selling two single family homes we currently have rented. Total cash on hand will be about $300K. Our plan is to do a 1031 exchange and purchase a multi-family property around $1M with either 4 or 6 units.

I am having a tough time figuring out where or who I should speak to about getting favorable financing for a deal like this. As interest rates are at all-time lows, I figured I would get a great deal. However when I spoke to a mortgage broker who explained that any MF property 5 units or over is considered "commercial" and would require significant paperwork regarding historical cash flows and financials and a higher rate. On the other hand any MF with 4 units would be considered a residential loan, but the max that a bank would finance is $510K, otherwise this would be considered a "jumbo loan". 

Any experience on how to best navigate this would be tremendously helpful. 

Thank you!!