Pros/cons of commercial mortgages
I'm still fairly new to real estate investing, and so I was shocked when I talked to a couple of more experienced real estate investors and they told me that their go-to for financing real estate is commercial. They haven't hit the 10 conventional loan limit, they just prefer to deal with commercial loans instead of conventional loans.
Here's some of what I've learned:
- Commercial loans are generally shorter in duration. The folks I've talked to tend to favor 20-year loans.
- Commercial loans generally have higher interest rates than conventional loans of the same duration.
- Commercial loans don't end up on your personal credit history.
- Commercial loans are based on the property rather than the borrower, so the application process is simpler.
I'm curious what others think about this? Are there other advantages or disadvantages to getting a commercial mortgage instead of a conventional one? Some areas I'm particularly interested in:
- Are there constraints over who can own the property? We talk a lot about whether or not you can get a conventional loan and then get it into an LLC. Any similar concerns for commercial loans?
- Do you have to get a commercial loan in the name of your LLC?