All Forum Posts by: Mark Bookhagen

A couple notes: 

- Commercial loans usually have a 20 year max amortization period.

- Need to know the credit rating of the tenant.

- Cap rates never include debt service in the calc. You want to calculate your cash on cash return which is (Net Cash at the end of 1 year / (all cash you bring to closing + cash you spend during the year including mortgage)

With a commercial mort, you'll need to re-calc your amort with 20-years (not 30). Other than that, go for it! One thing you'll want to check is if you're planning on selling within 5 years and want to use the the Home Sale Tax Exclusion - I'm not sure if it applies to commercial property.

6.25%? Yikes.

Paint will definitely help the appraisal as will the small jobs. Not so much with landscaping besides weeding.

Good luck! Low appraisals when buying can be blessing in disguise. Don't just write the check before trying to get the seller to come down on their price - often they agree to split the difference.

How many units?

One issue that may pop up: When the single family is about to close, they will see the the commercial loan banker ran your credit. They will want to know what you are doing; and you have to tell the truth. It may be a non-issue or the single family banker may need to start from scratch and see if you qualify with the new information.

Buy with cash, then cash-out re-fi.

Expect to make dozens of offers before getting one accepted.

Of course it is possibly. What's the difference?

It is a grey area, but you have to prove it wasn't a flip because flips are not allowed for 1031. The way to prove it was a flip most assuredly is owning it more than 365 days.