Good morning, I'm inviting responses to those who have financed a portfolio of single family homes and their experience with commercial vs. conventional long term fixed financing. Looking back what have been the pros and cons in your experience...thank you!
@Nick Perry - the terms and rates with residential financing are more favorable.
It would depend on your situation. I have residential loans on properties 1-3 and commercial on properties 4-11
I do not like commercial financing because of the 5 year balloon (never know what rates will be in 5 years) but I really had no choice. I can't get residential loans on more than 10 and I can't cash out if I have more than 4 - and my first 3 are in a high appreciating market and I felt that I would be limited in my growth ability but not being able to reinvest the equity
@Brie Schmidt I think hit it on the nose. Rates/terms with conventional are better, but it really depends on your situation and what you're looking to do with those properties as far as exit strategy and other factors.
Only .02 I would like to add is that I don't know who she used, but there are lenders who will finance these as commercial and will give you a 10 year term on a 30 year amortization. So while it's not as attractive as fully amortizing 30 year loans, it's still long enough for you to lock in a solid rate and have that rate fixed for a period of time until your balloon period.
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