Western Pennsylvania · Member since 2017 · 9 posts · 2 votes
I have been buying rental properties for about a year now and generally things have gone well. However, I continue to be frustrated having to pass up on deals because the cash flow is not their when I have to finance at 15 years for a commercial loan. If I were able to amortize or get 30 year loans there would be many more deals I could purchase. I am very conservative and try to follow the 50% pretty closely but even if I stretch a bit the deals just are not there on 15 years.
@Brian B. I think finding a 30 year AM on residential rentals is going to be virtually impossible if you're going the commercial route.
Could you make it work with a 20 year AM? Almost every commercial lender I deal with is willing to do 20 year AMs. If so, I'd recommend calling more local banks and credit unions.
Not all banks are the same. I had to learn that the hard way.
Thank you for the two responses so far. I have been working with a regional bank because I do a lot of business with them via another company I own. So I have not really shopped around seriously other than rates which they have been competitive on and they cap my closing cost at $500 per mortgage.
I will check some small local banks and see if 20 or 25 is possible. Do they usually lock the rate for that or is it just amortized for that length but the rate lock is shorter? I didn't think they liked to hold commercial paper for smaller rentals longer than 10 years or so.
@Brian B. - you definitely don't need to take a loan on multifamily with 15 year amortization. As mentioned further up, 20 - 25 years amortization is common from local community banks. Going the small-balance agency route would get you 30 year amortization, but I'm not sure if your loan will be over $1 Million?
Some more explanation of all the multifamily permanent loan options: https://www.biggerpockets.com/blogs/9562/72944-all-the-multifamily-perm-loan-options
Yea I am going to check with some smaller community banks and see what they have to offer. Hopefully they can be as competitive on rates and low closing costs like the regional has treated me.