All Forum Posts by: Seth Williams

Yes, anything over four units is a commercial loan. I’d find a local person down there. 

@greg is dead on. Anytime you want to sell or do anything you are stuck doing everything three times, appraisals etc. I weighed this option and residential loans by property were essentially the same, but with more freedom. 

1) you will be able to use 75 percent of rent for three units, and underwriting will assume you live in the best / most expensive unit usually. You’ll have to provide leases or use market rent if vacant. This is what a few lenders have told me in underwriting in the past.

2) before you go crazy finding properties - ps just get an agent ! Probably on here for the area you are looking - get pre approved or talk to a lender, they could answer all these questions and let you know more accurately.

3) see 2

4) cap rate, which I also use as one indicator even on small residential - is subjective to the buyer, and the p&l provided, which is usually bull, and won’t be as accurate with you occupying a unit. Personally, everyone wants a different style cap rate or return , you have to Set your own criteria. You can look up local cap rates online, I believe irr.org or something, and you can get area cap rates based on LARGE commercial multi family apartments. 

Best of luck! 

Lenders will be very specific to where you live, but usually a credit union or small bank will do 80 % LTV!

Closed on one myself with a notice to terminate tenancy, so how is that the case? Either way, with being so close to your lease end date you’ll be good! 

@Ricardo S., really easy. You have to express intent to move, And I believe it’s 6 mo, but either way, you wouldn’t be able to move if the tenants don’t move. As long as either you give them notice during the purchase process or after you take possession you are fulfilling your duty until they vacate. A quick google search shows the 60 days stuff, but the paperwork I signed said that, and legally if you complete the previous and intend to occupy after the tenant leaves you will be just fine. Hope that helps. 

I’d probably assign some sort of square footage variable to this too, but I usually just budget it as a percentage of income, since that what the bank is always going to do, and if a bank can underwrite for it, it’s good enough for me.

Roofing seems too cheap, paint and cabs seem to cheap, and almost always my biggest expense on everything is plumbing, so I’d raise those. 

Keep in mind the FHA Underwriting guidelines will make you take this house in one, or both your names and you would be foolish to do the latter. You won't be able to close with loan money down in an LLC. Set up An informal partnership where one gives the other money and close in one persons name, and no worries !

Let’s connect.

Alex, let’s connect I live in the area and have a real estate brokerage firm, and I specifically focus on investors and first time home buyers. Your plan is a solid one, but I’d try and go three units so it will allow you to house hack ( live for free ) . Shoot me a message or pop on my site in my signature and we can connect.