Commercial Lending Terms for 7 unit multi-family property?

[Ernie Sturzinger]

Hey everyone/anyone :)

I am arranging financing on a 7-unit investment property. I wasn't aware of this initially, but it sounds like you can't do conventional loan on 5+ unit properties. So, when I spoke with the bank today, they said that I needed to do a commercial loan since it is 7 units and that there is typically a 25-year term for the mortgage loan, which is fine. But then they say that the term for the interest rate is 5 years and then they will adjust rate every 5 year term thereafter to the market rate. I'm concerned that I cannot lock in a rate that I can depend on long term for this rental and if the interest rate is actually adjusted every 5 years, this basically becomes an adjustable rate mortgage. Is this normal for commercial lending and is this cause for concern? I spoke with this bank today and plan to reach out to other banks tomorrow, but wanted any insights from you all here if possible. My other investment property that is a 3-unit is a conventional loan on a fixed interest rate, so wasn't aware of the commercial loan process and parameters. Any insight is very much appreciated. Thanks!

[Alex Bekeza]

@Ernie Sturzinger There are some great 30 year fixed options for small balance commercial out there right now. On a 7 unit you could see 75% LTV & 30 year fixed in the 4s/5s.