Financing in Phoenix>Question Details

Ken, Real Estate Pro in Phoenix, AZ

What is the best source for financing multi-units, both residential and commercial? Who gives the best rates?

Asked by Ken, Phoenix, AZ Wed Jan 23, 2008

and terms and is equipped to do these types of loans?

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For a duplex, triplex, and/or fourplex, these can be financed with conventional residential financing. All of the "normal" residential lenders I've worked with can manage this type of loan just fine. It's really not much different (other than having the right appraiser) than a normal single family home, because the value of the property is based on like comparables, and is not based on the income the property produces.

At 5 units and above, you get into commercial lending. Now we need a completely different type of appraisal. The value of the property is now dependent on the income that the property produces and the expenses the property carries. When the income is low, the usual remedy is to increase the downpayment needed by the buyer. It's not uncommon for smaller buildings to need a 35% down payment, for example. It's also not uncommon for a 5-plex to be across from a 4-plex, but have the same asking price, simply because of the way each property gets its valuation. For that reason, 5-plexes can be a very good deal for the savvy investor.

As far as specific lenders, feel free to give me a ring, and I'll give you the names of some people I've worked with. I'm asking you to call or email me, because I'm not keen on posting them here.
0 votes Thank Flag Link Wed Jan 23, 2008
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