First time Commercial investor here. How do you deal with uncertainty of having an ARM for something you want to buy and hold long term? The idea of potentially rising/adjusting rates pricing me out of a property I own is unsettling. If I go with a fixed rate, the shorter terms make the deal impossible from a cash flow standpoint. Are there commercial lenders who do 30 year fixed? Or do you evaluate and offer on a property assuming you need positive cash flow with a 20-year amortized loan? (under ten unit under $1 million property)
Appreciate your insights.
@Jocelyn Canfield My largest commercial loan is 5 year fixed, then adjusting, 20 year amortization. I'm 10 years into it so it's adjusting upwards right now. That said, the amount is small, typically just $25 more with each interest rate increase. They send me a letter stating my new payment.
One big advantage of the 20 year amort is that you build equity pretty quickly, so to me that helps offset the uncertainty. I've heard there are some 30 year amort commercial loans, so you can shop around. Personally I work with local banks and in my area, everything is 15 or 20 year.