I'd propose going conventional 5% down on an owner occupant loan on a MFR property.

Myself and sizeable group of investors and homeowners in Ann Arbor are fighting short term rental banning legislation in the City of Ann Arbor and are interested in working with an attorney or advocate with experience in short term rental legislation.

Myself and sizeable group of investors and homeowners in Ann Arbor are fighting short term rental banning legislation in the City of Ann Arbor and are interested in working with an attorney or advocate with experience in short term rental legislation.

@Eric R Stofa The 2020 legislation is awesome!

I am looking at a proposal to help finance the purchase of two buildings on Briar Dale Court, both with 12 units and priced at $600k each.

If so, you may be able to make the numbers work under your proposed agreement.

Just look at the insanity of what has happened and is proposed along the coasts.

Your broker may have forgotten, but when the appraiser reports back to the lender that it is a rooming house, the lender will walk away or only underwrite an LTV of 50-65%.Your best bet is either a private lender or finding a conventional lender which uses auto-approval software (TD is an example) and mortgage agent/broker who can steer you towards an application that qualifies for auto-approval (if at all possible).When we were first in the same situation, we approached a family member with a proposal to have their name on title and live in the house (rent and utilities free) in exchange for their serving as the Den Mother to keep the house in order.  

I actually really like the second option that Joe has proposed but more so than anything, check with your local state laws - follow your end of lease process (walkthrough, assess damages, etc) and figure out whether the full deposit will be returned, a portion will be retained or all of it will be retained based on damages.

Based on that, if you plan on keeping this property, you will be safer (assuming you have no intention of walking from the loan) if you have less leverage, i.e. your proposed 60% level.