mortgage for 4-unit owner-occupied property - Posted by Marc Lamphier
Posted by Marc Lamphier on December 12, 1998 at 10:42:07:
I am a prospective first-time buyer. My landlord wants to sell the 4-unit apartment house I am currently renting, and I am interested in buying. Appox. 180K price, rents are about $550 - $600 per unit/mo. I expect a positive cash flow after mortgage payments, taxes, insurance, maintenance, plus I will no longer be paying rent, so it seems like a good deal. I’ve lived in the building for 8 mos. so I know it inside-and-out, and the landlord is a personal friend in addition. He will become my tenant and I’m sweetening the deal by offering him free office space in an unused part of the basement. I think having the previous owner around will help if I have any problems with repairs etc. He wants to cash out and leverage up to a bigger building.
I have just started approaching lending institutions for mortgages. I am curious about what terms I might expect. I had originally thought I would qualify for a mortgage similar to a single-family owner-occupied home. I was looking for something like 10% down and 7% interest. Are the rates and terms for a multi-unit owner-occupied home very different? I don’t want to go up to 20% down if possible. Am I being unrealistic? I also understand that for tax purposes owner-occupied up to 4 units still qualifies for an interest deduction. Is this correct?