There is some good advice below. In addition to what has already been said, you should also be aware of new lending practices. Many people are considering multi-unit properties to help them acquire a home in an area they could not otherwise afford. I am working with several people in this category and have found that lending underwriting criteria have changed (make sure you check with your lender for their particular requirements before you go looking at units). Generally speaking, this is what I have found:
A. If you intend to live in the property and are planning to use the new FHA higher loan limits (over $1.4 million for a four-plex) to avoid the 20 - 40% down needed for investment properties then my lenders have advised my clients:
1. You need at least 5% down.
2. The rents must cover the mortgage payment plus taxes and insurance. In other words, the lender will look at market rents in the area and calculate total rental income. They will then analyze if this amount would cover the loan payments, assuming all four units are rented.
3. You must qualify to purchase the property separate and apart from #2 above. For this calculation, take 90% of the rents on the 3 units you are NOT going to live in and count it as income. Add this to your personal income. Now the mortgage payment plus all your other debt payments cannot exceed 43% of your income plus allowed rents.
4. Verify that the property does not fall under the West Hollywood rent stabilization ordinance (aka Rent Control), and if it does that the current rental rates are all at market. If not, then all of the above will be based on actual rents, not market rents.
B. If you are planning to purchase the property purely as an investment and use conventional lending, then the lenders will look purely to the rental income (even on a 4 unit) and usually only give you credit for 75% of the rents. This is why I say above that the down payment could be as high as 40%. And in West Hollywood, you do need to see if the rent stabilization ordinance applies to your property. If it does, then all calculations are based on actual rents, not market rents.
I hope your selected property qualifies under the above and you have found a great property at a great price and negotiate great price. Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty
Please be informed that there is no more 0 down. One way or another, you need some money especially if this is non-owner occupied. For this type of investment, the lender will require at least 20% down and a fairly decent FICO score. Have your financials ready and your credit score ran so when you see something you like you'll be ready to dig into it.