Considering a 5 unit
6 Replies
Troy Forney
from Valparaiso, IN
posted over 3 years ago
So I am considering a 5 unit, but the financing seems very risky. Spoke with a commercial lender and basically it seems as though it is amortized over 30 years, but I would have to either refinance or pay off the balance every 3 years. With an adjustable rate. Seems pretty risky. Anyone else have any other suggestions?
Jessey Kwong
Investor from Seattle, WA
replied over 3 years ago
@Troy Forney can I ask how much is the property and which city. I’m sorry to sidetrack from your post but just wondering out of curiosity
Troy Forney
from Valparaiso, IN
replied over 3 years ago
$169,000. Valparaiso, IN
William Truszkowski
Real Estate Broker from Michigan City, IN
replied over 3 years ago
30 year amortization is actually good. I would have expected 25 or maybe even 20 years on a commercial property. 3 years is low. You should be able to find 5 and maybe 7 years. Let me know if you can't make it work. If the numbers make sense, I'd be happy to pay you a wholesale fee and do the deal.
Salvatore Lentini
Rental Property Investor from Doylestown, PA
replied over 3 years ago
@Troy Forney 3 years is way low. I work with lenders that will do 30 year amortization with a 30 year term, and a 30 year amortization with a rare adjustment at 3 years (based on prime).
Andrew Johnson
Real Estate Investor from Encinitas, California
replied over 3 years ago
@Troy Forney It sounds like you’ve found a lender that is offsetting a longer amortization period with a shorter fixed-rate term. Odds are you can find a 5-7 year fixed-rate with a 20-25 year amortization period. For what it’s worth, almost all commercial mortgages have the risk of the 5-7 year fixed-rate with a balloon term. Especially the tiny balance mortgage amount that you’re talking about. The net result is that (for the most part) these local/regional banks carry their own paper, have their own loan committees, and set their own parameters. It’s the nature of the beast.
Troy Forney
from Valparaiso, IN
replied over 3 years ago
Thank you all for the replies and good information. I may be getting ahead of myself. I am 3 rentals and 3 flips in. In about 3 years. Just tired of one at a time. Very slow with all SFR's.