I had some questions I wanted to throw out there in relation to Financing a deal. I'm working on a couple of deals I want to make an offer on but I have been struggling a little bit with getting my financing sorted out. We do know we want to go the traditional route. The reason is my family business cash flows $700K+ net income/year and only has about 300k worth of debt overall (including a 13 unit apartment complex that is about 50% paid off) so I don't see any problem with getting financing for deals in the 100K-300K range. But my questions are what sort of terms should I be shooting for in my conventional loan?
My overall investment focus is to aquire a mixture of 2-4 unit (non owner occupied) properties and smaller apartment complexes before growing into bigger deals. When running my numbers I have been using the parameters of getting a 30 year commercial loan with an interest rate of 5.25%. Does this seem reasonable for what is out there in the market currently? Would the rates changed at all if I were to pay cash for a deal and then do a cash-out refi? Or would the terms be somewhat similar?
I have been researching the difference between commercial and residential loans but have been told that the commercial route is best even for duplexes and triplexes as I will not be occupying the property. What are your thoughts on navigating this? Do commercial and residential loans structure their deals that differently from each other?
Once I run my properties by different lenders in my network, I want to negotiate a fair loan that works for both parties but I can't tell what I should be asking for. Essentially, I'm trying to get all of your advice now about a fair request before I go out and contact 10+ lenders to get their rates. I'm not trying to be lazy but looking for a shortcut so I can negotiate better once I talk to them.
Another approach I want to explore is doing a cash out refi on our current apartment complex and use some of that cash to finance the deal. Then it's no cash out of pocket. But what are your thoughts on this approach?
Thanks! Any help is appreciated.