My first deal, but need advice!

[Young C.]

Hi All,

After reading postings and blogs, and listening to Podcasts here for the last couple of months, I finally pulled the trigger. 

I have my first rental property under contract.  The purchase agreement is a 6-unit deal in three duplexes (three parcels) that are located next to each other.  It looks like I have a couple of financing options: (a) three conventional loans; or (b) a commercial loan.  Both require a 25% down payment. The total loan amount would be around 200k.

Here are the pros and cons for each of the options: 
<Three conventional loans> pros: 30 year fixed rate, cons: 3X closing costs and lending fees.

<A commercial loan> pros: lower closing and lending fees (perhaps), cons: a 20 year at a higher rate (the rate will be adjusted every 5 years without a balloon payment).

I asked the banks and the title company for a breakdown of the costs for each option to compare.

Since this will be my first deal, I would like to ask the BP members for advice.  Is there anything else that I should consider?  I would appreciate any insight from you!  I don't want to screw up my first deal. :)  Thank you!

[Angela Yan]

I would go with the one that yields your biggest cash flow because the bigger your cash flow --- with controlled expenses can give you higher NOI. As you probably know, higher the NOI makes your property value goes up so when you sell it or refinance, you can get more money for your property.

Good luck! Also not sure what your goals are with this property but usually people never hold on to their note with the banks for very long, they are always refinancing to get money out or they flip to bigger projects every few years or so. This is how investors build wealth.