Investor · Wasilla, AK · Member since 2012 · 6 posts · 0 votes
I have a commercial loan on a 10-plex in which I'm looking at pulling out the equity to invest in additional properties (BRRRR strategy). My main issue is that I have an early payment penalty for the first 5 years of the loan and I'm only 2.5 years in. Do options exist to do an equity line of credit on commercial properties instead of refinancing to avoid paying the early payment penalties? If so, how comparable are the interest rates? I also recently heard that some banks don't look at whether or not the property is conforming to zoning regulations, but primarily on incomes? It's currently zoned as an 8-plex but is operated as a non-conforming 10-plex. Anyone have any experience on that?
Not a direct answer about getting a line of credit, but have you looked into potentially adding Mezzanine debt to the property in question? That would be a second loan on the same property, typically for a higher interest rate, and you could match the maturity of the second loan with when you plan on refinancing the first loan. Then when you refi with a larger first commercial mortgage, it pays off both existing loans.