Commercial Loan: 7/20, 7/25, 10/20, 10/25

[Weina Shi]

Which one is the best choice out of the four? From cash flow standpoint, 7/25 and 10/25 are the best. Interest rate on the 7/20 is the lowest. And the 10/20 and 10/25 offers the least risk for interest rate increase. How often do you refinance your commercial loan? My thoughts are that typically within 7 years you will want to refinance to cash out the equity to invest in another property so having a 10 year maturity is not useful. Any thoughts?

[Juan Vargas]

I agree with @Mike Dymski. You should implement what fits your business plan best. What are your goals? Do you plan on holding the property long term? Many use a 10 year term so as to weather the possible rise in interest rates. 

That being said, in most cases you should target the higher cash flow.