I just got pre-qualified for a large commercial loan to acquire a package of 6 SFRs. (I have 7 SFRs now, 6 of them acquired in the last 14 months using a mix of conventional, hard-money, and cash - with all now under long term Fannie Mae loans). It is not clear whether this package deal will work yet, but I needed a pre-qual to submit with a Letter of Intent to see if the seller is willing to negotiate. The likelihood of getting to a deal that works for me would be higher if I could get a little better rate and amortization. Am I likely to find much better terms on a commercial loan than below?
75% LTV (based on purchase price)
5.75% interest rate
20 year amortization (5 year fixed rate)
Are there private lenders out there who would do a similar rate over 30 years or lower rate over 20? I'm thinking of folks who would otherwise be buying annuities. If I get my foot in the door. I'll have 30 days to perform due diligence and arrange financing. Where else should I look? I have not been attending local REIA meetings. Guess that would be one place to start.
Also, I understand it is OK to borrow down payment money (at least to some degree) where these commercial loans are concerned. I can comfortably cover about 1/2 the total out of pocket (including settlement costs and some rehab) with cash on hand, but would prefer to borrow more of it from family, friends, or whoever - should I ask the seller about financing a portion of the downpayment?
@Doug McLeod Check with several 'local' banks. I have had better luck with locals than with national banks unless it is a standard loan in a primary market. Let them know what your looking to do and compare their offers. I would think you could see rates in the mid to high 4's. You will also likely need to show cash reserves representing 6 months of expenses.
I agree with Doug.
Those terms are pretty good. I would think at a local bank you could get up to 25 yr am and better on rate depending on the details.
You are right, Source of down payment is not as important on commercial loans. Cash reserve requirements vary.
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