Lenders are happy to lend you money to fix up (rehab) a multi-unit property. Why? Because the rehabbed property will be worth much more after the work is done than it was before. So again your lender has solid collateral that retains its value year after year. You sometimes can:

• Get a rehab (also called property improvement) loan on a multi-unit property you do not yet own but plan to buy, if you have a neatly prepared rehab proposal to show to your prospective lender.
• Use part of your rehab loan for the fix-up and the remainder for the down payment on the multi-unit property, giving you a zero-cash deal.

The best place to obtain small (4 to 20 units) rehab loans is in your local area. Why? Because local lenders know values in your area, Result? They're ready to lend small multi-unit rehab money to you quickly, with less paperwork than distant lenders. Where can you find such lenders? In your Yellow Pages telephone book .

Get Guaranteed Loans for Your Investment Real Estate
A guaranteed loan for multi-unit real estate is a first mortgage backed by a government agency—such as the Housing and Urban Development Department (HUD) or Federal Housing Administration (FHA}. These mortgages, in turn, may be packaged and sold by Fannie Mae or Freddie Mac—short for Federal National Mortgage Administration and Federal Home Mortgage Loan Corporation. Section 203(b) is probably FHA's most popular mortgage insurance program.

To use a guaranteed multi-unit loan, you apply at your local bank or mortgage company for your first mortgage. You'll be told there if your loan can be guaranteed by HUD/FHA or another government agency. If your multi-unit loan can be guaranteed:

• You must use approved loan forms because your loan will probably be sold by the lender. To do so, the lender must use approved multi-unit paperwork—namely the application you're given.
• Type your loan application throughout. If you can't type, have someone in your family or at a public facility do the typing. A typed application raises your approval chances 30 percent.
• Give all the data requested. If some parts of the application do not apply to your situation, mark those parts not available

Be certain your amount, term, and interest requirements (if any) come within your lender's guidelines. Don't get turned down for a SI million loan because the maximum loan made by the lender is $500,000! On some guaranteed multi-unit loans you may be required by the lender to have Private Mortgage Insurance (PMI). You'll find that PMI is required by lenders when:

• The first mortgage is 80 percent or more (typically up to 95 percent) of the value of the property on which the loan is being made.
• Your credit score is not the highest—say, less than 600—when you apply for your first mortgage loan. The lender is trying to protect the money being put out on the multi-unit loan.
• The lender thinks a foreclosure is possible. The PMI covers any losses the lender may have in a foreclosure with an upper limit of 20 percent of the multi-unit's value.

You can use guaranteed loans to build your multi-unit real estate wealth. Just see your bigger real estate lenders for larger projects—up to about $5,000,000. Beyond that level of investment, loan guarantees are less important.

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