I live in New York City and I am interested in purchasing a brownstone. The brownstone currently has 4 units; 2 occupied and 2 unoccupied. I intend to rent the vacant units.

The asking price is 1 million (this is New york City!) and the building needs about $50K in work. The realtor suggests that I apply for a residential loan since the rates are lower. Does this sound kosher?

As kosher as a Chanukah candy. I am not in residential lending, but it is a well known fact that the largest property that can be financed through a conventional residential mortgage is a 4-unit owner occupied improvement.

However, you may find some trouble getting enough money with just one loan. As you can see by following this link http://www.fanniemae.com/aboutfm/loanlimits.jhtml The limit might not be enough to finance the property. Talk to a residential lender {or two} first and see what they can come up with. I am a big fan of keeping the borrowing on the residential side whenever possible. This country does encourage homeownership so you might as well take advantage of that.

Yep! Commercial would be 5+ units. We are on Long Island. Give me a buzz if you have any questions about commercial.