Refiance or Commercial Line of Credit on Investment Property Need opinions

[Alexis Zion]

Hey gang,

I would like to run a scenario past you

Here is the deal: I own a 4 unit building on which I owe $75,000. I believe it is worth about $180,000--maybe more, maybe less. I am trying to decide whether or not to

1. Apply for a commercial line of credit or
2. Refinance the property

I would like the cash to make down payments for other buildings. Here is what I’m pondering:

1. With the commercial line of credit
   • The interest rate is variable over the 3 year term
   • The interest rate would be 4.75% (prime + 1.5)
   • The rate could go up when interest rates start to rise
   • It would cost me about $1500.00 to do it

• I don't have to take it out of the LLC because its commercial
• It is with the bank that did with the original mortgage
• It would not show up on our personal credit report (unless there is a problem)
• With the refinance
  • It would cost me about $3000.00 to do it
  • I would have to quitclaim it out of the LLC for a time (2-4 weeks while the county files it) and then back into the LLC (another 2-4 weeks)
  • We would get 70% LTV...possibly 65%
  • My monthly payment would go up

• The interest rate is fixed
• My rate would be 3.000% (15 year term)
• Its with a new bank that has no problem being second

I am not sure what would make the most sense. I would like you opinions.

Thanks!

Something new I learned: PenFed credit union will issue lines of credit on investment properties. The property must be in your name, however, and not that of an LLC or other business.