BRRRR - Commercial Loan Vs Traditional

[Tom Doherty]

Hey BP I've been reviewing the BRRRR stratgey and the big question (I'm sure asked a lot) is the refinance part of the stratgey. I've been hearing people say they refinance with a commercial loan because a commercial loan determines their approval based on the property and not the borrower where as the traditional convetional loan will look at both? Commercial loan sounds great but what is the catch? From my understanding the rate is fixed for 5 yrs (depnding on loan) and then you have to refinance again? What are the pros and cons? Is commercial the only way? The reason I ask is because I made the jump into real estate as a realtor and soon to become an investing. I'm worried that I am not able to receive an approval for a traditional/convetional loan due to my lack/history of income. Thank you for all of the help.

[Stephanie P.]

@Tom Doherty

@Michael Noto is right.  Without a two year history of self employment or a current W2 income that supports your debt, a national asset based lender, one that doesn't necessarily care about income, is your only choice.  

The rate and fees will be higher, but in many instances, those are far lighter than the loss of not getting a great deal on a property.

Each lender has their purpose.  Conventional is the best way to go sometimes, hard money others and then asset based middle of the road is yet another.  It just depends on your specific situation.

Hope that helps

Stephanie