After three years holding my first investment properties, a pair of rental townhomes, I've started down the path of selling them for a tidy profit. Next move: a 1031-exchange into a larger investment.

I'm trying to decide whether to go into two or more duplex/triplex-type properties, or roll it all into a multifamily like a small apartment building, e.g., 5-10 units.

I'm trying to get a handle on the financing that may be available to me in this situation. Am I right in assuming the following:

For non-owner occupied residences, i.e., duplex, triplex, or 4-plex, it's typical to put down 20% on a 30 year amortization schedule, at say a half percentage point over the going rate for owner occupied single family residential homes.

For non-owner occupied multifamily/apartment building type properties, it's more likely that I'll need to put down 25% or even 30%, on a 20 year amortization schedule, at around a whole percentage point over the going rate for owner occupied SFR.

Am I in the right ballpark here?

In my region, it's tough to find cap rates much beyond 5-6%, at least in the price range I'm looking at -- up to around $700k.

It seems to me that under these circumstances, and given the fact that I'm limited to around $135k down payment (not including closing costs), it may make more sense to purchase a number of smaller 2/3/4-plex buildings in order to get more property for less down payment. On the other hand, there are a few attractive smaller apartment buildings out there. Yet they might be just out of reach given the larger down payment requirements.

Am I right in thinking it probably makes more sense to stick with a small number of smaller properties, versus a single larger one for about the same selling price, given the financing limitations?

Your assesment of residential investment property is close. The difference is actually a constant 1.5 discount points for conforming agency loans. This can translate to a difference in rate of anywhere from .25 to 1% over the "going rate." However this is the scenario for the best rates available. You can get residential investment properties with no money down for slightly higher rates. Obviously the more you borrow, the more you will pay, but such financing can increase your buying power. The rapid appreciation of real estate usually allows for a beneficial refinance every 2-5 yrs. This way the investment property you paid nothing for, and have only broke even on in rental income and maintenance can be refinanced into a money maker down the road and you still haven't paid anything for it.
The options are limitless in residential real estate and anyone with good credit can make a fortune in it. The big players do get rich in the commercial arena, but it takes a small fortune to get into it competitively. It doesn't sound like you are quite ready for that kind of leap. Remember the golden rule of the stock broker, diversify. DOn't put all of your eggs in one basket. It is better to buy several smaller properties than one big one. It reduces the chances of complete devastation if something were to happen. Buy 5 or 6 2-4plexes, rake in your profits, and bide your time until you can swing a couple of larger properties.

I am a fan of commercial real estate multi-families etc., and, you are only talking about a 5% difference in the down payment requirements. Plus, would it be more risky, time consumming and possibly more expensive to own 5-6 smaller properties versus a 10 unit multi?