Loan Rates and Conditions (Fixed and ARM)

[Mark Loshelder]

Good morning,

We (a small LLC) are beginning to aggressively build our small portfolio of single family and multi-family properties in and around the Pittsburgh metro area. These are buy and hold rental properties. Thus far, we have financed our purchases (or refinanced after rehabs) with a local bank (First Common Wealth), which will only offer ARM (five year with 5.5% initial rate), with a early pay-off penalty of 2%, and a requirement for personal backing (i.e., my partners and I sign for the loan).

With interest rates forecasted to increase, we were attempting to secure and diversify our debt with some fixed rate products.  We just were informed by a broker that they are NOT able to find/ offer us a fixed rate product (less than 10 days prior to closing on our next property).  All of our personal finances are in excellent condition (e.g., incomes, credit scores, etc.).  We have hard money lending pre-approval in place for our flips, but the conventional rates from that lender are not competitive. 

I am curious to learn what others BP members are finding, doing, and securing for financing.  Are the terms noted above reasonable?  Should we be able to obtain commercial fixed rate lending?

Any feedback or direction will be greatly appreciated and utilized.

Thank you,

Mark