When do Asset Based Loans make sense?

[Christopher C. Welber]

I have a property that we're working on closing. It's a rental. We're trying to get a W2 mortgage because it's cheaper but we have been approved for Asset Based Loans. The main issue with these loans is they're all in the 4.5 to 5% interest range with 2-3 points as fee and large down payments needed to make them work. W2 is at least 1 point lower.

My question that I'd love to get feedback on is when do the Asset Based Loans make sense? I see people taking 6-7 or even 8% sometimes. Is this because there's that much profit/equity in the project? Are these mostly fixer uppers? It seems like you need to be getting 10 to 15% off market price and have a good chuck of profit in a fixer upper for these loans to make sense? For our project 5% is about the limit to still have profitability.

I was wondering what others experiences are with ABL type and commercial loans.

Thanks again BP People!