Commercial Loans

[Matt Unruh]

I am thinking about making the leap from SF rentals (I currently have 4) and buying an apartment building. The SF market is just getting really tight. Before I get too far down this road though I'd like to understand what I can reasonably expect from a commercial loan as that will have a major impact on my ROI. I'm considering a 24-unit property right now with an asking price of $2.7M. I've seen various posts about 5, 10, 20, 25, and 30 year amortization of commercial loans. What is most realistic given the loan size, what sort of interest rate should I expect, and similairly what am I likely to have to pay in closing costs? This is a BIG leap for me so I appreciate any insight.

[Mark Creason]

Originally posted by @Matt Unruh:

I am thinking about making the leap from SF rentals (I currently have 4) and buying an apartment building. The SF market is just getting really tight. Before I get too far down this road though I'd like to understand what I can reasonably expect from a commercial loan as that will have a major impact on my ROI. I'm considering a 24-unit property right now with an asking price of $2.7M. I've seen various posts about 5, 10, 20, 25, and 30 year amortization of commercial loans. What is most realistic given the loan size, what sort of interest rate should I expect, and similairly what am I likely to have to pay in closing costs? This is a BIG leap for me so I appreciate any insight.

I am typically seeing 10 year terms with 30 year amortizations on loans like these.  The key is in the deal though.  Better location equals better terms.  Better cap rate equals better terms.  Better property type equals better terms.

Mark