What's a good loan rate?

Question

Hello Bigger Pockets Family!

I have a quick one for you -->  What's a good rate for a 30 year fixed loan on a duplex?  I was pre-approved through Bank of America with a 4.5% interest rate but am not sure if that's a good rate for an investment property.

Assume excellent credit.  Is that rate ok?  Are there any other recommendations?

Thanks!

Larry K. · Answer

4.5 sounds about right.

I just got 4.375.  30 year.  No points.  NOO.  Duplex.  Refi.

Kyle J. · Answer

You're welcome.  Whether or not to pay points is a personal decision usually based on how long you intend to keep the property, what your "break even" point will be, amount of available cash at closing, etc.

Based on your rough numbers, I estimate that it would take you approximately 45 months to "break even" if you were to pay the one point.  So, give that, if you're planning on holding the property for 30 years it might be worth it to you.  If you're only planning on holding it for 4-5 years, maybe not.

Hope this helps.

James H. · Answer

(20 X 12) / 1070 X 100 = 22.4% COC return. I say it's worth it.

Bill Brady · Answer

Denise and Kyle - Awesome information.  Thank you.  It's 4.5% with 20% down and 0 points.  I can buy it down to a 4.125 with 1 point but not sure if that extra $20 a month is worth the upfront :)

Denise B. · Answer

Hi Bill,
4.5% is good, assuming no points.  I just closed (6/18) on a duplex (non-owner occupied) with 25% down and got 4.125% with 1 pt for 30 year fixed.  I think anything under 5% is pretty cheap money in the long term!

Kyle J. · Answer

Your numbers look good.  Again, not a bad rate.  I recently (past couple months) did two loans for SF investment homes and got 3.875% and 4.1% on those.  However, the term on both was 15 year.  So your rate for a 30 year seems like it's in the ballpark.  That's still really cheap money.

Bill Brady · Answer

Thanks for the info, Nathan!

Kyle - $107,000 purchase price, 20% down, 796 credit score, 30 year fixed.

Kyle J. · Answer

Your "quick" answer is...it depends.  Factors such as the amount of the loan & down payment, length of the loan term, your individual credit score, etc etc etc are all going to influence what rate you get.  Without any of that info, it's hard to say.  But generally speaking, 4.5% isn't bad for an investment property.  It's not the best available rate, but like I said it's not bad.

Nathan Emmert · Answer

Paul Floor was quoting me 4% on a NOO with credit scores above 740.  If you're living in a unit, it should be even lower.  See this thread for more info...

http://www.biggerpockets.com/forums/88/topics/73685-4plex-deal---i-like-it-do-you