Hello! I am looking at a property that includes 6 homes, 1 duplex and a larger home that rents by the room. He'd like a cash down payment and as he states it is a "commercial loan that needs to be renewed every 5 years. 400k at 4.75%" that is assumable. Are commercial loans assumable? My mini research said likely not. And, it sounds more like a balloon, not something you just renew. Isn't that what's common?
It's in a good area and lakeside. The place will need work but I see potential with it. It is currently almost fully rented. There is a similar place next door that is taking off with cottage rentals and a boat storage and launch.
I thought it might make a good vacation house hack. I'm running the numbers but still have a lot of blanks to fill in for expenses. I'd appreciate any input and/or advice!!
Thanks so much!!
Almost all commercial loans are assumable if you talk to the bank directly. You'll have to qualify through their underwriting process, but most banks are willing to talk to you about it.
And renewable probably means it matures (balloon note), but it could mean there is a built in option to renew at either the lender or the borrower's option. Just ask to see the note and/or loan agreement from closing. And most banks will gladly renew a performing loan at maturity, the reason for the 5 year term is to offset interest rate risk primarily.
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