Good or bad terms?

[Michael Marcoux]

Hi all, 

Talked with a private equity lender a couple days ago. I have only one house flip under my belt and have never dealt with rental properties, so I'm not sure if I can do better than these terms or not. Here's what I have:

- First 3 years are interest only payments, and then it amortizes like a regular 30 year loan with a penalty equivalent to the last 3 year's worth of payments for paying off early. So no balloon payments.

- Variable interest rate starts at 7%, but can go up or down no more than 5%.

- Can be used to purchase up to a 6-plex. Cannot live there.

- Must personally guarantee the loan, i.e. if I go underwater and cant make payments they can come after my personal assets.

Now granted, this would be my first time taking out a loan. I've talked to a few commercial lenders who lol'd at the idea of loaning me so much as a red cent, so I feel like I should take what I'm offered for now. I just wonder if this is too raw of a deal and I should keep looking elsewhere. As an aside, I know I need to crawl before I walk and walk before I run, but it's a lot harder to find smaller properties that are good deals (I recently found an 11-plex for 250k...and a 3plex for 150k!!!) so I'd rather start out large, but this is what I have to work with.