I know many people here have experience doing their own investments, so I was hoping to get some info. How much leverage would you use for say, the buying and converting of a property into 3-6 units. I'm thinking student housing, or something around those lines. I live in the midatlantic and both cities I'm near have tons of schools. Could possibly also have access to 100k-ish in equity. Also, is this something you take to a community bank, or a cre mortgage broker? Please feel free to point out any obvious things I may naively be missing here or other things to consider. Much appreciated.
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No real rule of thumb... get whatever amount of leverage that gives you the best return on your money and least personal investment risk.
3-6 units is pretty small for a commercial loan, but I believe a broker/local bank should be your best bets.
By student housing you mean buying mutlifamily to rent to students? I would avoid as your first investment. Can buy a property for a cheaper yield and rent to families who won't destroy your property.
I'm not answering your questions but get the parents to guarantee the lease and get a decent security deposit. Just my 2 cents.
+1 to comments above renting to students. I would get the maximum loan possible (highest LTV) without recourse, which means the lender can come after other assets you or your co-investors may have. If you have, say $100K, you could get up to $250K of financing with a good rate - just make sure to back out a good chunk for renovations and reserves, plus 10-20% contingency
This is a bank deal. A broker would just take it to a bank. Leverage probably depends, but I just talked to a lady yesterday who is buying duplexes and triplexes and she claims to be able to get 75% from a variety of banks.
In response to Gene above, I would think it'd be really hard to get non-recourse, but what do I know ...
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