How do you evaluate interest rate to determine if the deal is worthy?

[Tom Tran]

Hi guys,

I am currently evaluating a refinance with a blanket/portfolio loan to cash out for a purchase of a 13 units...I exploring both avenues for loan; 1) conventional loan via WF which quoted around 4.75-5.25% or 2) blanket/portfolio loan cash out from a private lender company for 6.25%. If option one was approved, then of course I would go with option one...but for whatever reason option was not doable, is it worth to go with option2 with the cost of financing at 6.25%?

If I am approved for option 1, it would get about $1800 cash flow per month.

Option 2: with the higher rate, my cash flow is only $1400 per month...but also effecting my current loans of the 4 houses with the rate of 4.25 to 4.875.

If for some reason I am not approve for my option 1 loan, does it make sense to go with option 2 with a smaller lender? My goal is to expand my portfolio, but does it make sense to pay a higher interesting rate to get the deal done, but with less profits? I understand that there is some profits better than none...what do you guys think? have you ever been in this situation and how did you arrive at your decision.

Thanks in advance for reading my question.