Purchasing first property triplex would love some feedback!

[Diego Mugica]

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Hello, I have had a SFR home for about 10 years. Didn't make a whole lot of money being rented but I sold it and decided want to buy the something bigger. I have met with many different financial institutions. They offered me an investment mortgage at 5.75% fixed rate for 30 years but asking 25% down. However the property would be under my name and not an LLC. My accountant says its in my best interest to put it under LLC. I can understand the benefits from doing that however, commercial loans are only offered to me using an LLC. Best deal I was offered from a local bank was 6.25% floating or 6.75% fixed rate, 20% down with 20 year amortization. Incidentally the numbers on the property have been the ones Ive liked the most. The sellers had the property undercontract and buyer fell through bc he could not get approved financing. I would love to hear feedback on property and advice on using the 30 year mortgage vs the commercial loan. Thank you again!

[Frank Chin]

I own several triples through the years, and I always went the fixed rate mortgage route. Back then, in the 80's, I needed 30% down, but the safety of the fixed rate enable me to sleep better at night. I started my investing in the 80's when mortgage rates soared to 18% though I got mine at 13.5%. The big advantage if you start with breakeven cashflow and then when interest rates dropped to 7.5%I refinanced with rent increases, I did fantastic.

Just to give you a contrast, my dad bought his rental, a mixed use no less, in 1963 with 5% fixed. It was that since the 50's. It wasn't till the late 70's that interest rates started going up. In the 50's and early 60's people who bought duplexes, rent one unit to the tenant, live in the other, can live rent free with the tenant covering the mortgage with a normal down of 20%. Those were the days.

The main problem with floating rates is my fear the big bad 80's may come back, with soaring inflation, and the Fed, with Paul Volker, fought inflation by raising rates. With Trump starting trade wars, and the Trump tax changes which pushed deficits to a trillion/year will be the cause. For me, floating rates are too dicey at the moment.