commercial vs residential loan in South Carolina

8 Replies

I have the chance to purchase a 4-plex in South Carolina.  I need advice about if I should use a 20% down payment at 5.25 interest commercial loan or a 20 % down payment residential loan at 4.75% interest rate.  I hear that the residential loan make take longer to get a approve and require all the units to be rent ready.  The commercial loan will be a lot easier to get. However the commercial lender will only do a 20 year amortization.  

@Robert Barnes are the units rented? Also, what kind of condition is the property in? It's been my experience that commercial lending has more flexibility but as you've noted the AMs are shorter and the rates are higher. 

I personally like the flexibility of portfolio lending for growth/expansion strategies. It's hard to beat a fixed rate from the residential side, but it's easier to take advantage of the equity on the commercial side.

@Robert Barnes Unfortunately I don’t have an answer for your question but I’m curious what bank you used to get commercial terms like that. I couldn’t find anyone under 7% and less than 25% down. Is this because it’s technically residential or owner occupied?

@Will Gaston   All the units are rented except one and that unit needs to be renovated.  The property is in good condition.  The owner has taking care of it however all the units does need new windows.  Yes I am probably going the chimerical route for ease and flexibility.  Could you please tell me some equity advantages with the commercial lending?   

Also I am still doing business with Stacy at the bank, Thanks again for that contact.

Originally posted by @Robert Barnes :

@Will Gaston  All the units are rented except one and that unit needs to be renovated.  The property is in good condition.  The owner has taking care of it however all the units does need new windows.  Yes I am probably going the chimerical route for ease and flexibility.  Could you please tell me some equity advantages with the commercial lending?   

Also I am still doing business with Stacy at the bank, Thanks again for that contact.

 It's been my experience that some commercial lenders will allow "cross collateralization" on portfolio loans. Meaning that if you only owe 40k on a house worth 100k then the may may let you use a portion of that 60k of equity as a down payment for another property.