Traditional Vs Commercial Financing?
Traditional Vs Commercial Financing?
In the last 2 years, my amazing wife and I have purchased 15 SFH and 3 duplexes (21 doors all worth 50-80k each) that we have rehabbed and rented with the plan to hold for ever and use to be financially free.
Currently we profit an avg of $400 per month per property.
We plan to continue and pick up at least 9 more by the end of the year using a commercial line of credit we have against a few we own outright and BURRR them.
We currently have them financed/owned as followed:
- 8 are on traditional 30 mortgages at 5.5-6% (best we could get last year on investments)
- We currently have 5 properties on a 20 year amortized
commercial loan for 5 years.
- We currently own 5 outright that we have a commercial line of credit against.
-OPPORTUNITY-
Our commercial loan guy said he could roll all of our loans (they are all at the same local bank) traditional and commercial into one commercial loan at 4% amortized over 20 years for 5 years.
This will lower out total monthly payment by $150 per month and theoretically cut 10 years off the repayment.
**Here is my QUESTION:
Would you take the traditional loans off a fixed (not currently amazing) rate and roll them into a better commercial loan that needs to be renewed in 5 years?
Pros:
- Higher monthly cash flow
- Theoretically faster payoff (im sure we will pull all the equity out asap anyway)
- Free us up to make traditional loan purchases again
(this will give us different opportunities to buy houses in a changing market down the road)
Cons:
- Interest rates could go up in 5 years (though, most of our properties moving forward will be on this type of loan anyway).
DO WE roll them all into one commercial loan or keep them as as they are????