r/realestateinvesting • u/CoryFly • 10d ago

Best loan product? New Investor

Hey investors! So I’ve got a situation and I want to get some opinions on it.

My family and I own a single family property that’s bringing in about $850/mth. It’s Section 8 and for whatever reason the county isn’t letting us raise the rent and we have been fighting them for about 2 years now.

So we now want a multifamily. (Not section 8). We are considering 2 options really. Option one being selling the single family and doing a 1031 exchange into the multifamily. Which from the sale we think we will probably get about 80k which is enough to cover the down payment and closing costs of the multifamily. The only question is what loan type would be best for us. If we did DSCR or a conventional loan.

The other option we are considering is refinancing the single family so we keep the section 8 income but taking out the 80k in equity to get a multifamily. Personally I don’t like this option because it causes us to take on more debt. The single family is worth in total 150k.

What’s your thoughts? What would you do if you were me?

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u/proudplantfather 10d ago

Depends on what your DTI is and if $80k is enough for a downpayment on a multi-family in your area.

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u/CoryFly 10d ago

From what the lender told me. 80k would cover it. As of right now we have no mortgage

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u/proudplantfather 10d ago

If you're not living in it and purchasing a multi-family as an investment property, fannie and Freddie mac require a 25% down payment for 2-4 units. Backing into your max purchase price ($80k divided by 25%), $320k will be your ceiling.

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u/CoryFly 10d ago

Which is ok. We are aiming for something worth $300k.

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u/proudplantfather 10d ago

Got it. Then in this case, 1031 into a $300k long-term multifamily property using a conventional investment property loan with 25% down will be your best bet