Posted by LK on May 09, 2006 at 15:18:03:
An advantage is the closing cost savings by doing only one loan/closing instead of four. A disadvantage would be if you chose to sell one of the properties and all four were collateral. It could effect the loan requirements.
4 rentals one big loan - Posted by Mark
Posted by Mark on May 09, 2006 at 08:45:12:
I have 4 rentals and was thinking that I might refinance but wanted to get one big loan for all of them about $260,000. Has anyone do this before? is it a good idea or not? Mark Toledo Ohio
Re: 4 rentals one big loan - Posted by John Corey
Posted by John Corey on May 11, 2006 at 05:26:17:
Mark,
There are pros and cons. Mostly cons unless you are a sophisticated investor who is looking for commercial terms.
What is your motivation for getting 1 loan? If the motivation is ‘less hassle’ or so you can write ‘one check’ monthly then you are clearly going down the wrong path.
Jimmy & LK made some good points. A blanket mortgage is generally not advised unless you are interested in commercial terms.
John Corey
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.