Re: 4 rentals one big loan - Posted by Jimmy
Posted by Jimmy on May 10, 2006 at 06:51:13:
This is how I do my deals. talk to a business banker (and not a home mortgage lender). there are pros and cons.
expect 15 year am.
interest rate could be as low as 6.75%, depending on how good a profile you have
expect vigirous underwritng the first time. but if you stay with the banker, and cultiate the relationship, you will find future loans easier and easier.
commercial loans do not have to meet the same underwriting guidelines as home loans, which can make them quicker and cheaper to transact. I do not have to get appraisals (if asessed values are high enough for my desired loan), not do I hav to get title insurance (atty title review works, and costs half).
but the loan is cross-collateralized, so if I sell one of the properties, the bank will grab a proportionate amount of the sales proceeds and pay down the loan. don’t expect them re-amortize the underlying loan, unless you negotiated this ahead of time. what was a 15 year am may be an 11 year am after a sale.
here’s the deal. 30 year home loans for investors are cool. they are kinder and gentler on your cash flow. but if your deal can tolerate a 15 year am, you will thank yourself 1000 times in 15 years when you are free and clear.