Qualified for large commercial loan--HELP!

5 Replies

I own two properties free and clear valued at $1.2M. Do I take the commercial loan before I have a new property to invest in? Or do I pay a higher interest for a "heloc" type loan? Hoping to learn about some things I may not be considering, and would love some input on where to safely park the money. Thank you!

@Maureen Rhodin It all depends on what type of property you own now and what you want to buy next.

You need to run numbers both ways to see what provides the best cash flow. A line of credit or a refi. The loan terms, rates and length with vary depending on the type of properties you own. Interest rates are pretty low right now so you may want to refi and lock in if that works for cash flow.

@Greg Dickerson thank you for the reply--appreciate it! My properties are both mixed use and I'm looking to invest in a 6-unit+ if I can find one with good numbers. The line of credit was about 1/2% higher than the outright refi. My thought is to take the full amount and eat the cost of holding the loan (hopefully less than a year), since in the long run it will be cheaper than using the line of credit and paying a higher interest rate over the 10 years. I know I have to be diligent in directing the money properly (easy to squander on other things). Worst case scenario is I squander all the money and need to sell/refi in 10 years. Properties are in the SF Bay Area and am assuming that even if the bottom falls out of the RE market, I'll be ok. Am I delusional? Am hoping to get some feedback from long time investors on what I may be missing in this scenario. Thanks

I can tell you in the last economic down turn I saw banks reduce or freeze Helocs all together so people's credit lines dried up whereas the refi you have already taken the money out.

It all depends on how fast you think you will use the money and pay it off before a down turn happens and banks change or tighten their various types of loan programs.

No legal advice given.

@Joel Owens - Good to know. I agree with the scenario you present and hopefully should the scenario you present occur, I'll be prepared to snatch up some great deals! Now to up my discipline and confidence and take the big step. Thank you

BTW, my daughter graduated from SCAD in 2017. How's the Savannah commercial property market?

Hi Maureen,

Savannah is on the lower right portion of GA and more of a port town area. It has pockets of commercial that does well. I am more in Cherokee county which makes up the Atlanta 20 plus county MSA area. In GA you have about 4 ring clusters that are seen as the main parts of GA and then everything in between is more smaller suburban to rural type towns. I am born and raised here 44 years so far. 

I have clients all across the United States that purchase all over. I review about 1,000 commercial retail properties a week nationally for clients. I used to sell more multifamily but only do the larger stuff now on that side 10 million plus. Retail I will work on usually 1.5 million and up because STNL is one lease to review.