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Jeff O'Neal
  • Flipper/Rehabber
  • Tulsa, OK
32
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32
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My first commercial loan - is this a good deal?

Jeff O'Neal
  • Flipper/Rehabber
  • Tulsa, OK
Posted Nov 8 2017, 11:09

I'm pursuing the purchase of my first small apartment building (6-units), and I received a commercial loan commitment from the local branch of a mid-sized regional bank.  The details of the loan are as follows:

  • $250,000 purchase price
  • 80% LTV (lessor of the purchase price or the appraisal)
  • 20 year term
  • 4.75% rate fixed for five years, adjusted at each 5 year anniversary to the current 5 year Libor Swap plus 300 basis points
  • 0.5% origination fee
  • Operating checking account maintained with lender

Does this sound like a decent loan?  Is the 5-year adjustment typical?  Should I try to negotiate the origination fee, or is it reasonable?

Thanks in advance for your input!

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