Posted by Ned on March 16, 2006 at 21:47:16:
Around here the banks do not do 30 yr on rental properties. They say 20 yr is standard. Do they do 30 yr in your area?
mortgage for rental properties - Posted by Ned
Posted by Ned on March 13, 2006 at 22:19:06:
I have six rental properties and am adding three more. My FICO is around 800, with no debt other than mortgages.
Does 5/1, 1/2 point, 7%, amortized over 20 yr mortgage sound good? How better can it get?
I would appreciate your timely comments.
Re: mortgage for rental properties - Posted by John Corey
Posted by John Corey on March 14, 2006 at 24:42:05:
20 year amortization makes me think this is a commercial loan. Not good or bad, just different.
When you say how much better can it get, what is important to you? Some loans would offer a lower payment by making the term longer. You could get a better interest rate in the early years but the loan would not be better in the later years. You could focus on a loan that provides payment flexibility though they will not have the best interest rate.
As you must understand there are a mix of variables and when you improve one variable normally something has to give.
So, what do you want to accomplish? How long do you expect to have the loan in place (exit being a refi or a sale)?
John Corey
Re: mortgage for rental properties - Posted by Ned
Posted by Ned on March 14, 2006 at 22:55:08:
Thanks, John. Right now, starting out as I am, a low payment is quite important. I would like to conserve cash. I understand the thing about, I can’t get it all, you gain on one variable, loose ground on another.
I was trying to find out, as far as experience of other investors, is 7% a very good rate for a commercial loan right now, as my bank is telling me. I have a ten year, five transaction history with them. To take the question a step further, trying to benchmark, what kind of rate would an “A” clent/investor would get from the bank?
Where do you see the rates a year from now?
Re: mortgage for rental properties - Posted by Joe
Posted by Joe on March 14, 2006 at 11:23:54:
John makes good points. I’m guessing that since you are refi’ing rentals that you are attempting to leverage yourself into more investments. If that is your attitude, then you are probably trying to continually take out equity from your rentals to do more deals. Since a 20 year causes you to pay off the loan quicker, requiring a refi sooner, why not shoot for a 30 year which causes you to pay off the loan slower, not requiring a refi as soon?