5-10 Unit Properties Attached and Detached with Restrictions

Nov 21, 2023

The 5-10 unit property investment market offers unique prospects for real estate investors, but entering this arena comes with a distinct set of criteria and restrictions. At NonQmFunding.com, we specialize in catering to these specific needs, ensuring that potential investors are equipped with the right knowledge and financing options to make informed decisions in this lucrative field.

Here are some essential pointers for investing in 5-10 unit properties:

  • Minimum DSCR 1.15: The Debt Service Coverage Ratio (DSCR) is a crucial metric, ensuring sufficient income to cover mortgage payments and expenses.
  • Max Vacancy 2 Units: The property must have a maximum number of vacant units to meet eligibility requirements.
  • No Short-Term Rentals for Qualifying: Long-term market rents must be utilized for qualification purposes, excluding short-term rentals.
  • Utilizing Market or Actual Rents: The lesser of market rents or actual rents should be utilized for the qualification process.
  • DSCR Calculation Based on PITIA: DSCR calculations consider Principal, Interest, Taxes, Insurance, and Association fees to assess the property’s financial stability.
  • No First-Time Investors: Investors should have some experience in the market before considering 5-10 unit property investments.
  • Housing History Requirements: The history of housing payments should be timely, avoiding any 30, 60, or 90-day delinquencies in the last 24 months.
  • Minimum Reserves: Depending on the loan amount, investors must maintain a specified amount of reserve funds.
  • Compliant Commercial Appraisal: A USPAP-compliant commercial appraisal is required, including a rent roll, map, and income-expense statement for evaluation.
  • Secondary Appraisal Evaluation: BPOs and Drive-By Commercial Sales are required as secondary appraisal evaluations to ensure the accuracy of property valuation.
  • Escrow Requirement: Escrow accounts are mandatory for managing and covering taxes, insurance, and other relevant expenses.

At NonQmFunding.com, our comprehensive approach and specialized solutions aim to guide investors through the complexities of investing in 5-10 unit properties. By providing clarity on criteria and restrictions, we empower investors to make informed, strategic, and successful real estate investment decisions.