Norma Toering & Team submitted an offer on a four unit residential income property located in the beach cities yesterday. The listing agent thanked me for the offer and revealed it is one of several offers submitted. Why are four unit income properties in such high demand by investors? The answer is simple--it's the financing. Apartment buildings of four units or less fall within the 1-4 units residential financing guidelines. Once you make the leap to five plus units, it is considered a commercial building and requires a commercial loan.
Most investors want to leverage the purchase in the future even if they are paying cash as this particular buyer is doing. Attractive financing is important and has a large impact on cash flow. Commercial interest rates are higher than residential rates even if the property is not your primary residence. Consequently, many investors seek out buildings with four units to maximize the income while minimizing the cost of financing the property.
- Norma (310) 493-8333
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Based on information from the Association of REALTORS®/Multiple Listing as of the initial date of this article/blog publication and /or other sources. Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.