Commercial vs Conventional Loan
What's everyones experience with commercial loans? I have all 6 of my duplexs in Fannie/Freddy loans. I've always liked the security net of locked rates yet I am now seeing the flexibility/affordability of commercial loans. The only reason I'm considering this I know a guy that just got a 2.5 million 10 year arm on 4.1% interest, is that typical?
I've been saving up 25% down and rehabbing my properties out of my own pocket for the past 7 years. I read rich dad poor dad 2 years ago and realized I've been doing this all wrong. I leveraged equity in my primary and cash down to aquire more properties last year. I'm looking at refinancing all and pulling out sweat equity and appreciation for my next. I'll break down the numbers below. And difference between both conviental and 4.1% arm.
I owe $923,907 with a LTV of 56%-63%
I cash flow around $5k/month which will turn to 6500-7k after rehabs of new properties I acquired last year. With a possibility of 8-9k if I renovate a existing property into a 5 bedroom and section 8 it.
With a 80% minimum cashout at 4.1% I could pull out $252,00 on low side appraisal increasing my current payments and lowering my passive income by $464/month.
With the high side appraisal my cashout would be $396,907 with my passive income decreasing $1250/month.
The cash out would be used to renovate existing properties, increasing rent and to purchase more properties.
On the Fannie/Freddy side I could cashout around $80k. Lose around 50k in equity to pay down rates and earn around an additional $800-1000/month with 30 year fixed.
The value of exponential growth in a commerical loan is extremely enticing but the certainty a 30 year fixed offers is admirable as well, being I'm very close to fiscal independence.
Has anyone else ever had this problem? If so how did it work out for you? Am I not considering all my options? Up until a few weeks ago I had never listened to a bigger pockets podcast yet known this place existed. Any personal anecdotals or info is greatly appreciated.