1 commercial or 2 residential loans - what to consider?

[Brad E.]

Hi BP!

Im offering on 2 duplexes that are next door to each other, owned by the same seller.  When looking at financing options what I've found is that I can do a single commercial loan which would be a 5 yr balloon amortized over 20 yrs or two residential 30 loans.  The rate on the commercial loan would be in the 5% range and I am not sure yet on what the rate will be on the residential.  I am guessing it will come back in the 4% range.

I am trying to decide which way to go here and I would love some insight from the community on what things to be taking into consideration for the decision.

Things I've thought of so far are:

- Loan costs - originating 1 should be cheaper than originating 2.

- Refinance costs - I'd have to refi in 5 years and who knows where rates will be

- Refinance risk - related to the bullet above, but there is risk around not being able to refi at all due to economic conditions in the future

- I can get the commercial loan in my LLC name. Not really sure if there is some benefit to this

- The commercial loan wouldn't count against my total allowable fannie mae loans

- Hassle - this is hard to quantify, but dealing with 1 loan just seems easier overall 

What are some other things I should be thinking about here?  I would be interested to hear any positive and negative risks that I'm failing to include.  

Thanks in advance for sharing your thoughts!