Attempting my first deal, interest rate question

[Terry McAllister]

Hey everyone, 

I had a quick question. Long story short, I am in the process of purchasing my first single family rental house and I just went through the pre-approval process. I used a local and reputable lender, and the best interest rate they could give me was 5.2% on it because it is an investment property. Is this the going interest rate for investors starting out? 

I am a 32 year old male, great W2 job(130k annually, firefighter/paramedic), I have perfect credit, own my primary residence and have plenty of money in the bank. The house I am attempting to purchase is 170k and worth about 200 in the shape its in. I was expecting a much better interest rate and less fee's, but maybe this is the normal for newbies in investing?

[Michael Garofalo]

I definitely agree with everything @Caleb Heimsoth said. 5.2% is very low as far as historical standards are concerned. 

I'm in the process of doing a cash-out refinance on my first investment property, and the terms are likely going to be in the 5.5-6% range, with a 10-year balloon (granted I am going with a commercial loan because the property is held under an LLC).

As long as you can continue to cash flow, I wouldn't bat an eye at anything less than 8%. My uncle has been in the mortgage lending business for almost 30 years and that's been his general opinion on the cost of money.