5 Duplexes: residential or commercial loan?

[Guy Yoes]

I have an opportunity to buy 5 duplexes for 500K (5@100K each). I plan to 1031X two of my current properties (225K total) to make the purchase. I have talked to several lenders and am not sure the best route to take for financing.

Issue 1. If I buy all 5 at once lenders are pushing for commercial loan at higher rates. This would save money on closing costs. If I buy one at a time (close same day on all) I can get better rates but would have 5 closing costs. I think closing one at a time will save money in the long run as the rate would be 1-1.5 less. Any thoughts?

issue 2. My current two properties I plan to 1031X are in my LLc. To go conventional I would need to put them in my name and out of the LLC. This will take some time and more costs. After the closing I would want to put them back in a LLc which would cost more money again.

Option 1. Go commercial and put the 200K down across all properties at 60% LTV. I plan to go 30 yr as this is going to be cash flow for retirement.

Option 2. Buy 1 property out right for 100K and the other 4 @ 25K each. I could do conventional and get better rates but would still have the LLC issue.

Option 3. Go with a private lender, do all 5 at once, keep the LLc and try to buy down some points.

More info:

The person selling the properties manages his and about 25 others. Part of the deal is he will continue to manage them. I'm good with that as they are long long term renters and he has a good history with them. We will move to the area in about a year (I live in Ok and the properties are in MO.) Eventually, I will manage them myself. This is a private sell with no RE agent involved. Is there a way I can get comps for the properties without going through a RE agent?

I appreciate any comments or questions!