If you are purchasing multi-unit investment properties, the type of loan will depend on the properties. If you are buying 1-4 unit properties, conventional residential financing applies. If you are looking at 5+ units, then commercial financing applies.
Often times, residential financing will give you better terms than commercial financing. For example, you can get a 30-year fixed mortgage with residential financing. A commercial loan may offer a fixed period, but it may vary after the fixed period and could contain a pre-payment penalty. The costs are usually higher on a commercial loan, too.
We had a client who wanted to purchase 5 4-plexes as one transaction. We shopped both commercial and residential loans, and found that we could obtain better financing if there were 5 separate transactions for each 4-plex. We were able to secure 30-year fixed mortgages for each 4-plex, rather than a variable rate commercial loan for the entire project.
If you are considering purchasing multi-unit investment properties, contact us and we can help you structure the financing.
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