Commercial Mortgage Loan Advise

[Gaurav K.]

I am buying a 10 unit apartment building for $550k. Each unit rents for $650/month and taxes are $15k/year. I am getting a Mortgage Rate of 4.25% and it’s 5 year fixed, 10 year balloon, 25 year amortization - 30% cash down.

Based on your experience, do you think it is a good deal and good mortgage rate? Are balloon payments normal in these transactions? Are there better mortgage options for buying apartment buildings? If yes, can suggest some better alternatives. My credit score is 790+.

Any advise will be appreciated.

Thanks!

[John Warren]

This loan is a fine loan, and you probably won't be able to do much better unless the loan balance is over 1 million. The balloon payment is not abnormal, and it just means you will need to do a full refinance at that point. You can sometimes negotiate a bit on things like that if you don't like the balloon. Commercial loans are a lot more negotiable in some ways than residential loans I have found.