Why Your 5th Property Changes Your Lending Strategy Forever

When investing in multi-family properties, it is crucial to understand the shift in financing that occurs once you move beyond four units. Here is a brief overview:

• Financing Type: Buildings with five or more units are categorized as commercial real estate, which means they are not eligible for traditional residential loans like those from Fannie Mae or Freddie Mac.
• Lender Focus: The lender's primary concern shifts from your personal income to the property's financial performance. They analyze its ability to generate sufficient cash flow to cover the mortgage and expenses.
• Financial Requirements: Investors should anticipate needing a larger down payment, typically starting at 25%, and be prepared for different loan structures, such as those with balloon payments or adjustable rates, where the Debt Service Coverage Ratio (DSCR) is a key metric.

Read the full blog article here: https://www.iqratemortgages.com/blog/financing-a-5-unit-property-in-las-vegas-nevada