Commercial CashOut Refi on a 4plex

[Michael Breedlove]

Hey BP Fam,

I'm looking to do a cash out Refi on a 4plex that I own just outside of New Orleans. I'm considering doing a commercial loan and transferring the property into an LLC. I've been quoted 6.25% with 2 points and a 30yr term and up to 75%LTV. My current interest rate is 4.375% and credit score is around 770. Obviously, I know interest rates are going to continue to go up. This will be my first experience doing any type of commercial loan. Just wondering if the interest rate and the 2 points is what I can expect from most lenders. I need to find out what (if any) prepayment penalties there will be. Any thoughts or advice on this would be helpful.

Plan is to pull out some equity and purchase a STR property.

[Andrew Postell]

@Michael Breedlove the commercial lender who gave you that quote should be able to tell you what the prepayment penalty is on their loan.  Some will have a 1-3 year prepayment penalty.  Some won't...but those that won't are usually a 20 year, adjustable rate.  With commercial loans (sometimes called portfolio loans) this is money that comes from the individual lender (as opposed to conventional loans which come from Fannie/Freddie).  And since there are over 8,000 different lenders in the US....that means there are over 8,000 different commercial/portfolio loans to choose from.  It might be hard to know what is best in your market.  I do know of one lender in your area that might be able to help but for the most part I would suggest with networking with other local investors in your area to find out which lenders are best.  Chances are other people have already done all the heavy lifting in finding good lenders - so you just need to find those people.  Read this post HERE on some suggestions on how to find investor friendly lenders.  Thanks!