Looking for some feedback on this deal
I am in contact on a four unit property and have run into a possible financing hitch. Here is the scenario. Purchase price 75K. Rent roll is 2390 per month. The projected monthly expenses are @ 1000 per month, which includes, insur, tax, maint, utilities, maint and PM fee. The financing my lender was suppose to be giving me was a 30 yr 4.75%, with 25% down. After the appraisal was done, they came back and said that it appraised well, but the comps used were out of the freddie mac limits and that that loan offer was not going to be able to done. They came back and offered a portfolio loan of 5.25% amortized of 20 years, but callable in 10. They said these loans are hardly ever called, but rate would adjust to whatever the current rate is, making it more of a ARM.
The numbers certainly change the debt service by about a $100 or so a month reducing the cap rate, but my bigger concern is if I should just forget about this loan all together because of the callable part. If I go ahead with this loan, I can wait and see what happens 10 yrs down, pay down the loan over the 10 yrs to reduce the principle further, or try to refinance at some point to a conventional 30 (with added cost though).
I am a bit hesitant at this point to move forward. Any thoughts out there with this scenario.
Thanks