The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: maz_phil on March 14, 2019, 09:23:38 AM
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Hello Mustachians,
I am looking to pick up a multi-family unit property in Virginia. I was hoping to use some sort of residential financing option so as to limit the amount of my own capital I need to spend during the initial investment. I've researched a bit on this topic and it is my current belief that residential financing ONLY covers 1-3 units. Is this the case? The complex/home I am looking to purchase is listed and metered to be a 4 unit building.
If it is the case that residential financing only works with 1-3 units, what options would you recommend? Is it possible to purchase this 4 unit but change it to be listed as a 3? Any advice or past experience(s) would be much appreciated.
Sincerely,
Maz_Phil
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Unless something changed in the last 5 years, residential multi family is 2-4 units. However, what I found when buying my duplex is that a lot of lenders have NO IDEA what they’re doing when it comes to buying a duplex, triplex or quad. But since they want to sound knowledgeable, they’ll make shit up. I went through 5 lenders before I found one that knew what they were talking about.
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Residential properties, per Fannie Mae and Freddie Mac, are one to four units.
Fannie Mae and Freddie Mac are the government sponsored enterprises that make up the majority of lending rules, since they buy up most of the loans.
Here is a link to Fannie Mae’s property eligibility guidelines, which is basically the same as Freddie Mac.
https://www.fanniemae.com/content/guide/selling/b2/3/01.html
For an investment property, expect to put 25% down on a 2-to-4 unit property.