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Can a Group of Investors Buy a Fourplex?

investment financing Apr 14, 2021

Let's say there's a group of you who are interested in purchasing one or more fourplexes together. Whether it's individuals in your family, or perhaps it's 4-5 separate partners...

  • Can you all go in together and purchase a fourplex as a group?
  • What does that look like?

This is a question we get multiple times a week. Yes, it's possible. It does get very convoluted on the financing side when you include more than two individuals on a loan for construction financing, and in a refinance into a 30-year fixed loan.

When a group of individuals or groups come in and want to purchase a fourplex with the Fourplex Investment Group, we'll have a conversation and recommend they have one or two spokespeople. It's easiest if you pick two people who are going to be on the loan. Even if the funds for the down payment come from the entire group, that's okay. Our construction lenders are aware of that and understand that's going to happen often.

One thing you do need to be aware of is that those two individuals will be on the loan for the construction loan, and will also be on the loan as the borrowers for the long-term financing once the development is completed. The deed or title of the property is also going to be held in these two individuals' names until the property is completed and refinance is done.

At that point, you work with a title company or title attorney to transfer the deed over to an LLC that your group has created. You have to wait until the property is done for that. In some states, it's a $20-30 fee to record that with the county... in Texas it's $500-600, to facilitate that.

After you refinance that fourplex and deed the property to an LLC, you can take ownership as a group together. The forming of the LLC and how you structure that entity is up to the group. How you want it to work should be established by working closely with tax attorneys and the attorney's office. They'll be able to structure it on your behalf.

When do you need to do that? You don't need to get a head start on the LLC. You just have to have it ready for when the property is done and refinanced.

FIG's Waitlist:

Each year, the Fourplex Investment Group releases new projects in a variety of markets. Joining FIG's investor waitlist is the easiest way to grow your portfolio before reservations fill up.