Commercial Loan Terms for Multifamily Property

[Tyler Brown]

Hi BP,

We're currently under contract on our first investment property (16 unit in Missouri). We have been shopping around with the local lenders and were approved for one commercial loan with the following terms: 25% down, 4.95% fixed for 5 years, then adjusted based on 5 year treasury + 3.5%, amortized at 15 years.

Other local lenders have higher interest rates at ~5.75%, but base their adjustable rate loan on the prime interest rate + 1%.

Obviously, we are trying to find an approval with a longer amortization to improve cash flow, but all other things being equal, should I even worry about the index the ARM is tied to (ie 5 year treasury vs prime)? Have been unable to find any other posts on this forum addressing this issue. Thanks in advance.