All Forum Posts by: Therese V.

 Thank you so much for the response. I'll check out the other forum to learn more about larger multifamily!

@David M. Thank you for your response. I don't have an LLC for rental properties, I was wondering if I need one in order to purchase a 7 unit property.

As to HML, we already have 4 single family LTR properties. We started in the fall of 2013 and pretty much have all the same tenants from when each property was purchased (1 property the people moved out but then called to move back in but we had already rented to someone else). Is that a good enough history to get better HML?

Does one only get HML for properties that need major work? I'm trying to navigate purchasing a much higher priced property where it will require a large down payment compared to cash on hand. We could cash out refi the rentals to acquire all of the DP needed. Multifamily is all new to me.

We are looking to purchase our first multifamily property this year. 

@Andrew Postell Thank you so much for a well written post explaining this terminology!

I have a few questions. For a 7 unit, it would be portfolio/commercial loan territory and I would need an LLC for the loan? Could I get the usual conventional loan?

When you say you use HML to purchase the BRRRR property is the HML funding the entire price or just the down payment plus you are getting a commercial loan? I work better with numbers for examples, so let's say a property is $1.5M, the HML would provide the 20% (or would you need 30% if 7 unit?) and then a commercial lender the rest of the loan to purchase? Or the HML would provide the entire $1.5M? It is only for the period of time that you need to acquire the regular commercial loan and pay back the HML, what are usual terms and rates for HML?

Your goals and story: My husband and I want to own real estate as a retirement strategy to replace all income and be able to also do various charitable work while providing for our children.

Type of property: The property is a single family home attached to what used to be a store. The home part was occupied by someone not paying rent in order to maintain residential status. The store part has not been used since about 88. The property is zoned B1 convenience commercial and has proffers stating what types of businesses can be located on the property. The realtor selling the property said the best use would be to tear down the building and put in a gas station, 3 acres property, realtor stated selling as land.

Location of property: NOVA, busy intersection in a huge growth area. 

Purpose of financing: We wanted to purchase the property to rent out the house portion and either rent out the store portion or use it ourselves as a store or some other type of income producing facility. The 3 acres we wanted to use for greenhouses, farmer market, partner with local nonprofits, etc.

Type of financing sought: We wanted to get conventional like our other investment properties but were told by our broker we needed a commercial loan due to zoning. Told by a commercial lender the price wasn't high enough because their min is $1M and told to talk to farm credit- farm credit told us because of the zoning we couldn't be financed by them.

Current or prior ownership of real estate: Currently own 4 single family LTR homes plus our primary residence.

Occupancy: All 4 rental properties are occupied by long-term tenants.

Value of property at present and/or your offer price: $350000

After repair value: No clue, selling agent said they were just selling for the land value and not even considering the home- although it is perfectly habitable. He just said the land is more valuable to tear down and build a gas station or dollar store etc with a huge parking lot.

Anticipated or actual appraisal issues: I have no clue because the building is unique and the zoning seems to be causing issues with trying to get financing.

Current rents per month: 0

Fair market rents per month: $1300 for the residence part. Not sure what the store part would be but we would be anticipating additional income of farmer market and other things with the property.

Down payment or equity: We have enough for conventional 20%, would consider refinance of other properties to get all cash.

Source of down payment funds, if applicable: Own funds or consider cash out refi of other properties.

Income Source: W2, we have the other rentals and have never touched the money from them- built up the last 9 years.

Gross monthly income (optional): $

Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc: $0

FICO: Good to excellent, flutters between whatever that cutoff amount is.

Credit issues:None

Additional details:The property was already sold. We wanted to purchase it, but couldn't figure out the financing part. I want to know what you would do so I am better equipped in the future because there are additional properties in the area with a similar situation. We lost this property, so I want to be prepared for the next. Should we have various pre-approvals from a multitude of lenders (just worried about the hits to credit that would cause for hard pulls). This was the lowest price property in the area, anything else we're starting to look in the $1M+ mark and I have no clue how to proceed on that. (read: scared at anything higher priced to us- aka more than this property)

Your goals and story: My husband and I want to own real estate as a retirement strategy to replace all income and be able to also do various charitable work while providing for our children.

Type of property: The property is a single family home attached to what used to be a store. The home part was occupied by someone not paying rent in order to maintain residential status. The store part has not been used since about 88. The property is zoned B1 convenience commercial and has proffers stating what types of businesses can be located on the property. The realtor selling the property said the best use would be to tear down the building and put in a gas station, 3 acres property, realtor stated selling as land.

Location of property: NOVA, busy intersection in a huge growth area. 

Purpose of financing: We wanted to purchase the property to rent out the house portion and either rent out the store portion or use it ourselves as a store or some other type of income producing facility. The 3 acres we wanted to use for greenhouses, farmer market, partner with local nonprofits, etc.

Type of financing sought: We wanted to get conventional like our other investment properties but were told by our broker we needed a commercial loan due to zoning. Told by a commercial lender the price wasn't high enough because their min is $1M and told to talk to farm credit- farm credit told us because of the zoning we couldn't be financed by them.

Current or prior ownership of real estate: Currently own 4 single family LTR homes plus our primary residence.

Occupancy: All 4 rental properties are occupied by long-term tenants.

Value of property at present and/or your offer price: $350000

After repair value: No clue, selling agent said they were just selling for the land value and not even considering the home- although it is perfectly habitable. He just said the land is more valuable to tear down and build a gas station or dollar store etc with a huge parking lot.

Anticipated or actual appraisal issues: I have no clue because the building is unique and the zoning seems to be causing issues with trying to get financing.

Current rents per month: 0

Fair market rents per month: $1300 for the residence part. Not sure what the store part would be but we would be anticipating additional income of farmer market and other things with the property.

Down payment or equity: We have enough for conventional 20%, would consider refinance of other properties to get all cash.

Source of down payment funds, if applicable: Own funds or consider cash out refi of other properties.

Income Source: W2, we have the other rentals and have never touched the money from them- built up the last 9 years.

Gross monthly income (optional): $

Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc: $0

FICO: Good to excellent, flutters between whatever that cutoff amount is.

Credit issues:None

Additional details:The property was already sold. We wanted to purchase it, but couldn't figure out the financing part. I want to know what you would do so I am better equipped in the future because there are additional properties in the area with a similar situation. We lost this property, so I want to be prepared for the next. Should we have various pre-approvals from a multitude of lenders (just worried about the hits to credit that would cause for hard pulls). This was the lowest price property in the area, anything else we're starting to look in the $1M+ mark and I have no clue how to proceed on that. (read: scared at anything higher priced to us- aka more than this property)

All of our current rentals are single family homes. We want to branch out to multi-family. There aren't many available for sale or recently sold to do the same kind of comp analysis that we've done for single family homes in the past. How do you calculate your purchase price for a multifamily?

One method I have considered is factoring the price by door. So, if we're looking at a 5 unit building with 1 bedroom units compare that to 5 SFH with 1 bedroom, does that make sense?

Another method is purely on rents for the area, so if a 1 bedroom can rent for $1300 and there are 5 units then you can go from there to figure out your max purchase price. Seems like a better method, but the market is so tight right now that people are listing so high (and some paying even higher).

Are you using some sort of cap rate or similar value to help determine any of this? Any additional insight is greatly appreciated!

Sounds like someone needs to watch Pacific Heights.  Don't do it. 

 I'm not talking about people that submitted an application. I am talking about people that responded to a listing that says no pets with information about how many and type of pet they have. I only have their name and email at this point.

I listed a property on turbotenant less than 2 days ago and already have 35 interested and 2 applicants (I didn't ask them to apply, they just did it through that system). Do you respond to everyone including those that you already know aren't qualified (example, we want 3x income and some don't have anywhere near that- do I still reply to them with the application stating we will notify if we want to move to the next step to run reports)? We also have listed no pets but some with pets are inquiring hoping we won't mind, should I respond we are not accepting applicants from anyone with pets or just skip since there are so many interested?

I'm planning on setting up a google form for people to use as the application and then we can separately choose the best applicant to run the reports so not everyone will have to pay. And then go in order until we find the desired tenant.