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All Forum Posts by: Jacob Ramsey

Jacob Ramsey has started 1 posts and replied 4 times.

Quote from @Ned Carey:

@Jacob Ramsey you may be misunderstanding the loans being offered. Many commercial loans are amortized over 20 to 25 years, even though they are due in 10 years.  What happens is in 5 or 10 years they are due and you either pay off the balance or refinance and get a new loan. 

That makes sense. I was wondering how people were able to make deals work on a 10-year loan. I feel like no one has ever explained it to me. It sounds like it is certainly possible then to make a 10-year work if I can get 20-25 year amortization. I guess the only other drawback is that I will be subject to whatever the new interest rates are when that first 10-year expires.

Thanks again for helping to clarify!

@Troy P., thank you for your input! I completely agree about the tax implications and will work with my accountant to get a better understanding in that area.

@Ned Carey thanks for your response! It sounds like a DSCR loan is what I am after. What I meant about the financials not making sense was that a 10-year would cause the loan payments to be too high and would therefore ruin the potential cashflow of that property. If I am able to distribute that over a longer time horizon, the property has great cash flow. Thank you for pointing me in the right direction!

A partner and I would like to purchase a residential multi-family property this year. Most likely this would be a duplex or triplex. In the areas that we are looking at, the property purchase price would be under 200K. We plan to form an LLC where we have a 50/50 split of the entity. I did not realize that if you wish to purchase a property using an LLC, that you would have to get commercial financing. I'm finding that most commercial lenders are only offering 10-year terms. I think I have the basic understanding that if we were to purchase in our own names, we could get a conventional 30-year. If we were to make the purchase using an LLC, then we would have to find a commercial lender. I like the idea of purchasing through an LLC for the added protection, but it seems like the financials don't make sense on a commercial loan. Are there commercial lenders out there with better terms and rates? I'd love to find a commercial lender with a 30-year term, but it seems like that is hard to find. I keep circling back to the idea that the only option that would work financially is a conventional loan, but I don't like the idea that I would have no protection. What are my options to make this work and pursue a property?