Commercial loan advise on timing for refi and cost for appraisal

[Mark Sheppard]

I have 6 houses in Fredericksburg, TX that we built from the ground up using a construction loan, that just recently rolled over into a 25 year at 4.5% principal and interest until the maturity date of April, 2027 where it will be a balloon payment.

Due to the rising interest rates, I wanted to see when is the soonest I could re-fi out of the current loan with a cash option to lock in a 25-30 year rate and pull out some cash that was used for the build. Also, wanted to know what an appraisal fee might be for a commercial loan that has 6 STR's on the propery.

[Henry Clark]

@Mark Sheppard

Recommend you stop for a second and build a "Bridge" or "GAP analysis" to your goal of 100 doors in 10 years.

Right now, you're doing SFR, realize you could switch to MFH so change the following figures as needed.

100 doors at $200,000= $20,000,000 over the next 10 years. Again, switch to SFR, new construct SFR, MFH.

Each 1% point down payment or collateral = 1% x $20,000,000= $200,000.

Each 1% point rise in the interest rate is also roughly $200,000.  Realize it will decrease over time.

I would use an average 7% interest rate over the next 10 years. 

Discount programs that won't be available to you as you grow.

Start talking with your financing partners and see which ones are able to grow with you.  Is their Federal Lending Cap rate above $18,000,000; assuming you have $2,000,000 in collateral on $20,000,000 base.  Switch to that Finance partner versus approaching it, one house at a time.

Learn from the past.  Most of Texas is an oil based economy, even if there is not a well within 100 miles of you.