Pre-qual for 2 loans, which to choose?

1 Reply

We qualified for our 4th investment property loan as individuals.  The 4-plex that we want to buy also qualified for a commercial loan, under the name of our LLC. Isn't this what we have been working towards? The terms on the residential loan are 4.625%interest, fixed, amortized over 30 years. The commercial is 20 yrs./ 4.12% fixed for 2 years, then balloon or renewed at the rate of the day in 2019.  Which is better?  We could use either lender on the property that we have under contract.  The building needs repairs.

The cash flow is better by $110/mo with the 30 yr am. So the return is better, obviously. It is the detail about the LLC that has significance. Is there an advantage of having debt as a company. On our next loan application as individuals, will we need to mention the commercial loan?

@Kathy Henley I'd say it depends on your strategy.  I'm all about cash flow so whichever option offers the better cash flow is what I'd use.  If you intend to pay off the loan sooner then the commercial is the loan to choose as you will be pushed to pay more principal down faster.  It's always great to start a relationship with a commercial lender early on as you will eventually expand and conventional lending will no longer be an option.  Choices, Choices...... Good luck!

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