am working on my first deal—looking at multi families—considering some duplexes. The price is right and they cash flow----but it would eat up my ready cash. So also considering something larger. Example 8units (New York, Niagra county) asking199K—before I make an offer—I am assuming I should get my financing in place----I would prefer a no doc—do they do that for commercial—I have 40K–credit score decent 760. I am going into this with a partner—her scores are lower probably 700/710. Do You think I should get the loan on my own—than put property into a LLC. Hope not to many questions. I am in CA, though looking to buy in NY.
There are no doc loans available with that score. You will need about 15-20% as a down payment. Also, it works ok to put the property in the name of LLC.
Also did you read that article in the NY Times about people buying property in Buffalo NY where the population is decreasing and there’s a few out of staters getting scammed? I would suggest you actually fly out there or get someone trusted to actually check out the property.
Be really, really careful on what looks like “a deal”. NY seem to have plenty of “deal” properties.
In general, you are doing a commerial loan so credit score are less important (even your partner is OK). With commerical deals, they look more at the property itself to see if it cash flows.
In general (for even money), I would do a duplex over an 8 unit any day. (I’ve done both). The rate and terms are very different in terms of lending. A duplex is easier and lower risk.
Hey --eveery body —“thanks” for all the great info and feed back!! I look forward to the day when i have more experience and can do the same for some other “newbie”
western new york is a great place to buy. Its under valued and positive cash flow which is hard to find in a lot of areas. The population declined badly a decade or so ago and there were many unscrupulous people to say the least that take advantage of others. Those people will always be around as long as there are people. Just do your due diligence and you can make some great money there. I know some people who have made their living off rentals in western new york for 20 years. The place is started to revive, there is only so much land. The corrupt local government that plagues the area is slowly leaving. If you have a nice rental then you will have no problems getting it rented.
You say You prefer to have a duplex over a 8 unit–numbers being equal. My concern is i am finding affordable duplexes in 30K range----but i am told almost impossbile to get financing–too small–so i would have to use most of my cash—might sound odd–but the appeal of buying something larger and more $ is i could get financing and hold on to more of my reserves— any thoughts…
yep, 30K is too small for a loan; plus you would end up paying all the normal closing cost.
My statement is based upon the fact that I have done several deals recently. My duplex deals I have gotten 30yr fixed loans at7% with 20% down. A 8 unit that will be closing in 2 weeks I have to pay 7.8% amortized over 25 yrs and the rate is only fixed for the first 5 yrs. I was able to get away with 20% becuase the cash flow was excellent on the propety (i’ve had commerical loans require 25% or even 30%).
So, dollar for dollar, its easier to get financing for 1-4 unit properties; however, also you have to consider cost of time and effort to get small deals done. So given the price range you are in, and just assume you pay cash, its a lot more effort to do 4 small deals than one bigger 8 unit deal and do commerical financing.
taylor