Which Type of Commercial Loans ?

[Tj Hines]

If I'm looking to acquire an 100 unit apartment building with the plans of of refi cash out at year 3 or 4 returning all member capital and then resell maybe in year 6 or 7, from your experience what type of commercial loan would fit this exit strategy?

And or,

If I'm looking to just liquidate in year 4 or 5 with out refi cash out what commercial loan would be good for this model?

Thanks in advance for your consideration

[Andrew Cushman]

@Tj Hines, as @Carlos Flores mentioned more info is needed.  However here are some options:

1.  Agency (Fannie/Freddie) debt.  Pros: low fixed rate, assumable, non-recourse.  Con: must be assumed to avoid hefty prepayment costs.  If you want to pull cash out, you will need to get a supplemental rather than refi.  I just completed a Fannie supplemental on a 96 unit property this past Monday and it worked out great.

2. Bank:  Pros: negotiable/flexible terms, no prepayment penalty or short step down penalty, rates can be low or high, easier to refi out of  Cons: usually recourse, may not be fixed, longer terms (7-10 years) may not be available.

3.  Life Company:  Very similar to bank. Difference is you can get non-recourse for a slightly higher rate.

4. CMBS: generally higher rates and a giant PITA. Some guys use CMBS effectively but I have always found better options.

I regularly use options 1-3 depending on the deal as our strategy is similar: purchase, add value and reposition, and then pull out cash to return to our investors.

Andrew