Finding mortgage for mult-unit
We are looking to purchase multi-unit (4-6 units).  We are looking in the NYC (Queens, Bronx or Long Island area).  

We would have 20-30% down.  What type of loan would be need to apply for? 
Would this be considered commercial loan?
We prefer fixed (15, 20 or 30 year loan) 
What would the interest rates be? 

Where can we apply for such loans? Any bank recommendations?

What other fees would be associated with this?


Thank you.
[{"id": "f8834f3", "text": "Start with walking into any local bank and ask to speak with a loan officer. Also, figure out the exact number of units. For many bank, 4 is residential and anything higher is commercial.\n\nOnce you\u2019ve talked to one back, go to another and do the same thing.\n\nSeriously, boots on the ground talking to a loan officer is amazing, establishes a relationship, and you\u2019ll learn way more that way.", "replies": [{"id": "f8864ea", "text": "I agree with enozero as usually over 4 units is commercial.  So if over 4 (commercial) you will have reduced options for loan term.  So many programs out there, but for my commercial loans the max term I have been offered is 10 year term.  Most of mine are 5 year term now.  With a 25 year Amm (longest amm available).  My most recent was 4.5%.  Good Luck!", "replies": [{"id": "f89vkt7", "text": "Thank you for taking your time advising and answering our questions. \n\nWe spoken to some banks around  (Chase, Capital One, Wells) and they do not offer commercial loans on multi-units.  They couldn\u2019t refer us where to go either!!!\n\nI guess we need to continue bank shopping for commercial mortgages.   \n\nHopefully they will have fixed rates for 15, 20, 25 years. \n\nWould you know if there are other fees? Hidden fees?!\n\nThank you again. \nRespectfully.", "replies": [{"id": "f8agh6o", "text": "Hi, i work for a commercial brokerage in NYC. The above posts are not true. I place commercial loans as a career. Multifamily properties in NYC easily garner 30 year amortization. I\u2019m refinancing a 20 unit multifamily, 6 unit multifamily, 12 unit mixed use building (3 separate deals) and all have been with rates below 4%. \n\nMultifamily by definition is 5+ units but there are still banks who lender on 1-4 unit rental properties on a non recourse basis with 30 year amortization. \n\nFixed rate terms longer than 10 years are rare but I do work with a small handful of lenders that offer 15, 20 and 25 year fixed rate mortgages. The rate increases and will be 4.25%+. \n\nThere are no hidden fees, if you get surprised by something most borrowers just don\u2019t read clearly enough. I don\u2019t really mix reddit and work but if you want to learn more feel free to message me.\n\nEdit: Bank branch loan officers don\u2019t know what they are talking about, turn around and call a commercial real estate originator in the HQ typically. They\u2019re a jack of all trades and could result in the \u201chidden fees\u201d because they don\u2019t know what they don\u2019t know.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f894t5c", "text": "Either local bank or something like a Freddie SBL would work.", "replies": [{"id": "f89x0j2", "text": "Thank you for taking your time advising and answering our questions. \n\nWe spoken to some banks around  and they do not offer commercial loans on multi-units.  They couldn\u2019t refer us where to go either! We have to continue to shop around for other banks.  \n\nWe need to look into Freddie SBL (this is new to us).  \n\nThank you again. \nRespectfully.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f898qpi", "text": "You can look into nonQM lenders if the traditional ones don\u2019t work out.", "replies": [{"id": "f8a0n48", "text": "Thank you for taking your time advising and answering our questions.  \nWhat\u2019s a nonQM lender?", "replies": [], "depth": 2}], "depth": 1}, {"id": "f89ablm", "text": "no offense, but this could answered by google or calling any local bank", "replies": [{"id": "f89mnkh", "text": "Seriously, how lazy can OP be? My bet is that they never come through completely and this is just a pipe dream.", "replies": [{"id": "f89ulp3", "text": "We walked into: Capital One, Chase, Wells Fargo (all banks located in NYC) ...., and they all informed us they do not do commercial loans, nor offer pre-approval letters such.  We asked them who can assist us in such and they weren\u2019t sure?! For real!  We were so baffled, we assumed they would absolutely do it. \n\nAgain, we are novice in investing in multi-unit investment and would appreciate any input that can educate us especially from other experienced multi-unit owners.  \n\nThere seems to be so many different answers when goggling,  how to determine which is right?!\n\nWe are working on our dream, but hopefully by educating ourselves.", "replies": [{"id": "f8a383t", "text": "I\u2019d stick to a 4-plex. That should be a good start and it\u2019s residential so you should be able to get a pre approval. \n\nFind a mortgage broker not a big bank like you listed above. They should be able to help.", "replies": [{"id": "f8a3iw4", "text": "The problem is not many 4 units in the areas we are looking at.  \n\nThank you. \n\nRespectfully.", "replies": [{"id": "f8a4kyn", "text": "That\u2019s because it\u2019s a hot commodity. Keep your eyes out and be ready when something comes up. Most owners are making good money right now so why would they want to sell?", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f89e56f", "text": "1-4 units can be capitalized with a residential loan. 5+ units, or anything with a commercial component (like a store or office) needs to be a commercial loan.\n\nThe people, process, and underwriting vary dramatically between residential and commercial. If you're going commercial, the underwriting primarily focuses on the property, though your own finances can still disqualify you. In residential, your own financials and income are the primary underwriting criteria.\n\n[Further reading](https://blog.stacksource.com/commercial-vs-residential-mortgage-loans-29c9fd1fd39b)", "replies": [{"id": "f8a00xl", "text": "Thank you for taking your time advising and answering our questions.  \n\nThe article is a great read and will look into further. \n\nDo you have any other recommendations for the novice?\n\nThank you again.\nRespectfully.", "replies": [{"id": "f8btnyw", "text": "Honestly, it does depend a lot on your background, your financial picture, your goals, and your appetite for risk. I wouldn't even say buying real estate is the right move for every investor, because there are a lot of ways to invest in real estate these days. But if you are ready, and really want to learn, partnering up with a more experienced investor on your first deal, even if you take less return, may help you learn much faster and make less mistakes. Even if you don't \"partner\" on the first deal, surround yourself with an A+ \"team\"! People that know what they are talking about (especially about underwriting, capitalization, and legal) and will give you advice.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f89eeqg", "text": "\"Everything is negotiable\"\n\n4 and under is a residential loan. 5+ is Commercial\n\nFor commercial multifamily\nInterest is around 4.5-5% right now. \n\nMost loans than I'm assuming you are interested in will amortize over 20 or 30 years. Hopefully you have access to 30 year amortization, since it means more cash flow.   You choose the term 3/5/7/10 years. Meaning the rate will adjust or have a balloon payment after those 3/5/7/10.\n\n\nThe subject property will have to satisfy 2 conditions: DSCR(Debt Service Coverage Ratio) and LTV(Loan to Value). then they will lend you based on the lower of the two values.\n\nMost banks will look for a DSCR minimum of 1.2 and an LTV of 25/75.\n\nDSCR of 1.2 means you NOI has to be 20% greater than the monthly loan servicing.\n\nIf your mortgage is 10,000 a month, then they want to see that the properties NOI is $12,000 a month.\n\nIf the property appraises at 1,000,000 they will lend you 750,000\n\nThey will take a look at these 2 factors and lend you the lower of the two so that they feel protected.\n\n\nExpect to pay 0 .5 1 % in points, then you have to pay for appraisal and some small origination fees as well. \n\n\n\nThe more experience you have, the better the terms get.", "replies": [{"id": "f89j185", "text": "If you take a higher loan amount does interest rate get lower or depends? When do you start seeing that impact of negotiation? Over 5m+ loans?", "replies": [{"id": "f89rcg7", "text": "Biggest loan I've gotten is 2m so far, but it all plays. if the 5m+ loan has a low LTV  and high DSCR and the bank feels very secure, they will cut the rate or cut the points in order to secure the deal. Its why I would always shop more than 1 bank, so the loan broker knows they are competing.", "replies": [{"id": "f89s32p", "text": "So getting a lower interest rate if you have a lower LTV is counterintuitive because they make more interest on a higher loan amount... interesting.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "f89wfai", "text": "Thank you for taking your time advising and answering our questions.  \nSeems like you are a pro in this.   \n\nWow, feel SO ignorant after reading your response.   So much we have to learn.  Most likely will follow up with you with some additional questions after researching above. \n\nIn the meantime, would you know if banks offer commercial loans at a fixed rates for ie: 15, 20, 25 years. \nWould you know if there are other fees associated with the mortgage? What banks do you recommend?\n\nTHANK YOU!!!\nRespectfully.", "replies": [{"id": "f8aavda", "text": "Banks won\u2019t offer fixed rates that long. The loans will be on a 20 (sometimes 25 or 30, but usually not) year amortization schedule, but fixed for 5,7, or 10 years at most.  At the end of that time, you refinance whatever\u2019s left. If rates go up you can reset the 20 year amortization schedule and you\u2019re now paying a smaller loan which will balance out the higher rate.", "replies": [], "depth": 3}, {"id": "f8agwtv", "text": "The longer your fixed rate term the longer and more strict your prepayment penalty is. If you want to sell or do a cash out refinance down the road then the prepayment penalty will make this tougher and less financially feasible.", "replies": [], "depth": 3}], "depth": 2}, {"id": "f8ah1fm", "text": "Not sure where your properties are but the agencies are writing fixed rate multifamily loans sub 4% in stronger markets.", "replies": [{"id": "f8akk13", "text": "I'm buying in Los Angeles and Central PA. I haven't looked at LA rates since April, but my Central PA rate was 4.75 last week. 5/20. Its a small loan though 300,000 on a 400,000 building I just stabilized.", "replies": [{"id": "f8ba9u7", "text": "My minimum deal size is $1mm+ but next time you refinance if you want longer amortization check out Corevest or Cherrywood. If you have multiple properties to pool together and cross collateralize I can help negotiate better terms. Most importantly that sounds like local bank recourse debt. If you can pool together more properties you should consider refinancing Working through a broker is always better in my opinion.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f89k1q0", "text": "honestly unfortunately I have experience doing this and its been a tough ride. I got started investing in 6-8 units and its a lot tougher than it seems.  my focus lately investment wise has been 25 plus primarily in Bronx.  \n\nthe only banks that are going to fund you are smaller community banks.  you can definitely get a loan but you'll need to speak you guys at flushing savings , roosevelt, those type of smaller community banks.  you won't find much luck w bigger banks, bc its just not worth their time.", "replies": [{"id": "f89k5i7", "text": "pm me I can send you some referrals", "replies": [], "depth": 2}, {"id": "f89zjbm", "text": "Thank you for taking your time advising and answering our questions. \n\nSo true.  We went to some big name banks, assuming the big bank would definitely do the commercial mortgages but don\u2019t, and they don\u2019t know who to refer you too!!!\n\nWill look into the local/community banks.  \n\nBased on your experience would you know if the banks offer fixed rate for commercial properties? We prefer fixed.  \n\nWhat other fees we need to be in look out for?\n\nWhat advise you have for the novice. \n\nThank you again. \nRespectfully.", "replies": [], "depth": 2}, {"id": "f8ah97o", "text": "Can structure your financing and send you listings in BX if you like. I work at a top 10 brokerage.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f8a34py", "text": "I'm a bot, *bleep*, *bloop*. Someone has linked to this thread from another place on reddit:\n\n- [/r/multifamilyrealestate] [Finding fixed loan\\/mortgage for multi-unit. Novice](https://www.reddit.com/r/multifamilyrealestate/comments/dztoiu/finding_fixed_loanmortgage_for_multiunit_novice/)\n\n&amp;nbsp;*^(If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.) ^\\([Info](/r/TotesMessenger) ^/ ^[Contact](/message/compose?to=/r/TotesMessenger))*", "replies": [], "depth": 1}, {"id": "f8ay1p8", "text": "I\u2019m a direct lender of Fannie Freddie so I can opine here with a little guidance:\n\n\nMultifamily agency is going to look like 75-80% LTV, 1.25x-1.30x DSCR, 5+ units, rates will be low 4\u2019s, 0% origination fee (anything else someone\u2019s fucking you, so just shop it), $1M+ loan balance, non-recourse, 12-36 months IO standard. 10/30 or 12/30 fixed. (5/30 &amp; 7/30 avail)\n\nYour lender will want 9 months DSC + DP + closing costs in liquidity, net worth equal to or greater than the loan amount and 2+ years of multifamily ownership experience, 3+ years of management experience if you intend to self manage. \n\nI flip everything I pass on to a bank lender. He\u2019s quoting 4.5-4.75 most deals, 75% LTV, 6 months IO, 7/25 or 10/25, 1 point origination, 1.25x DSCR, 650+ credit score, recourse. I\u2019m sure there\u2019s better if you shop like crazy but he executes which is important to me in my referral. \n\nHope this helps.", "replies": [], "depth": 1}, {"id": "f8bftmp", "text": "I should clarify: when I mean banks, I mean all kinds of banks. Large, small, grocery store, phone book, etc. Don\u2019t settle for the big ones. Get a variety. Many of the commercial lenders require substantial down payments to offset the risk, while many smaller banks will take on that risk with a smaller down payment. The commercial lender folks will pass you along to another lender and then wash their hands clean of you.  We do know what we are talking about... we\u2019ve been there and done that.", "replies": [], "depth": 1}, {"id": "f8cg094", "text": "if you want lowest rate and the most cash flow - CMBS is the way to go. Rates will not be this low for a long time. Just secured a 10 year term on 30 year amort at 3.86% (10 year swap + 199 bps) with 3 years of I/O. We got screwed on the rate because it spiked basically the day before closing.", "replies": [], "depth": 1}, {"id": "f8rsxx3", "text": "Trulia is a good website in my opinion, Zumbly works good too", "replies": [{"id": "f8us6x2", "text": "I agree, but I prefer Realtor lately, hopefully heatmaps are available for all websites lol.  Zumbly only offers in Chicago and LA though so very limited", "replies": [{"id": "f8uw631", "text": "Yes, for now.  but the calculated monthly costs are good. hopefully they update the listings soon", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]