What are the LOOPHOLES about an All-Cash vs. Conventional loan?

[Brenda Wright]

We are closing on a deal on a passive income property and wanted to know what are all the loopholes?

- Property is in Memphis.

- Property is worth 100k.

- Plan on purchasing 15 properties.

- 7% ROI

What are the ad/disadvantages of the closing?

What are the ad/disadvantages of refinancing?

What are the ad/disadvantages moving it to an LLC?

What are the ad/disadvantages of moving it to a commercial loan?

[Cara Lonsdale]

If you plan on purchasing 15 properties, watch your loan count.  If you stick with 1-4 unit properties, try to get conventional financing to take advantage of the best rates and terms.  Your first 4 properties will go smoothly like butter.  Properties 5-10 will be incrementally harder, but still can be done.  Once you get to 10, the conventional train stops, and you have to switch over to Commercial.

So, IF there is a way for you to pay off loans to stay under the 10 count, DO IT.  Stay in the conventional loan realm.  

Obviously, if you go over 4 unit properties, you HAVE to obtain a commercial loan.  In that case, just shop lenders.  There can be a spread between them for rates and terms.  Also, local banks may be better.  Not always, but in may cases.