Financing question.

[Pete Condit]

I tried this in a different forum, but, it looks kinda slow there and I haven't received a reply, Thought I'd try it here where there seems to be quite a bit more traffic.

A friend and I are looking at a 2 family. We will do it as an LLC with us as equal partners. Our plan is to acquire more units in the near future if this one goes smoothly.

How many? Don't know. Depends on how it goes. If it goes well, I could see us maybe going full time within 10 years.

We both will likely take 20K home equity loans to get this off the ground. This first property should sell for around 90K including the immediate maintenance it will require.

So, we are looking at 20K each carried as home equity loans against our homes, 50K as a commercial real estate mortgage.

Should we stretch out the terms for max cash flow now which will allow us to acquire other properties more quickly or should we go with shorter terms which will have slightly lower rates and quicker equity build up?

My personal thought are that we are in a very good period for property acquisition given the soft market and very low rates. This would mean stretch the terms now. But, I have a personal aversion to debt. I like to pay stuff off yesterday.

Any thoughts from those of you who have been there and done that would be greatly appreciated.