In this guide, I’ll define the term “multifamily” and provide some clarifications as it relates to private mortgage lending, also known as hard money lending or bridge lending.
In real estate finance, the meaning of the term “multifamily” is defined as a property with five or more dwelling units. If a property has less than 5 units, it’s classified as residential property. Properties with more than 5 units are classified as commercial real estate.
When you’re seeking a bridge loan, a rehab loan, or a long-term rental loan for a property with less than 5 dwelling units, don’t call it multifamily.
Terminology for Multi-Unit Residential Real Estate
The terminology you use for multi-unit residential properties depends on the number of units:
- 2 Dwelling Units = Duplex
- Or a 2-unit residential property
- 3 Dwelling Units = Triplex
- Or a 3-unit residential Property
- 4 Dwelling Units = Fourplex
- Or Quadplex
- Or a 4-unit residential property
- 3 Dwelling Units + 1 Retail Unit = Mixed-Use
The classification of residential versus multifamily is mainly relevant for the long-term loan which refinances a short-term bridge or rehab loan provided by a private mortgage lender. While there are lots of conventional lenders that can take out a short-term private loan on a dwelling property, the majority of them only consider residential investment properties with 4 units or less.
Most private lenders that would offer a short-term loan a 4-unit residential property would also consider a 10-unit multifamily property. For a short-term bridge loan (less than 2 years), multifamily properties are almost always considered by private lenders.
In 2018, many private lending companies started offering 30-year rental loans at interest rates similar to conventional loans, but only for properties with up to 4 units. Some private lenders can go up to 8 units for a 30-year loan.
How to Find Multifamily Private Lenders
If you’re seeking private financing for a multifamily property on our platform, There are two options for using our platform.
Option 1: Browse Lenders
Search on our site for direct lenders. All lenders have a very detailed profile with information about their lending guidelines, rates, fees and much more. Make contact with each out directly by email, phone call, or visit their websites. First select a loan type, then enter the state where the property is located.
Option 2: Create a Loan Request
Fill out a questionnaire with information about your financing needs. You can then browse lenders and invite a few of them to view your deal. Or ask us for recommendations; we’ll review it and invite a few select lenders that we feel may be a good fit.
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