Commercial Loan Term
I'm looking to purchase a rental house near a college campus. The initial bank I spoke with said the maximum term would be 15 years. Is this the industry norm?
I
Sounds about right. Most banks will offer terms of 5, 7, or 10 years on commercial multi-family loans. You may also be able to get banks willing to offer rollover options or ARMs. An example would be a 5 year loan that will renew every 5 years at a set rate above the then current treasury or benchmark. You would have the option to be able to opt out of the renewal. Some lenders will do 15 year terms and there are some programs like HUD that will go up to 40 years. I'd imagine you'd somewhat limited with the lenders/programs that offer longer terms because of the size of the asset you're thinking of acquiring.
Thanks @Eric Schleif . On another thread someone was saying to do a 30 year loan. My experience is similar to what you mentioned. Thanks for your input.
Typically then offer ARM x years, due in y with a balloon and you need to refi just prior to y.
@Thomas Ince You can get 30 year money, just not sure it's readily available for the asset you are analyzing. I just received a pretty decent quote on a 30 year term for a large multi-family building (300+ units) acquisition. The larger deals tend to have more financing options.
Hi Thomas
how many units is the property? A fifteen year term is good. On my first deal, I got a five year term, and refinanced it into a ten year term. I would say that industry standards for commercial are 5 7 10 years.
Gino
