Commercial Loan Refinance Help

[Mike Cox]

All,

  I have 7 townhouses all on commercial loans.  4 are on one loan and I have been paying this for 3 years.  It is fixed for 5 at 5% years amortized for 20, and then can be variable.  My loan officer said we can just write up the loan at the new rate after 5 years.  Not sure if this means he will lock it at new rate for 5 more years or what.  I have a prepayment penalty if I refinance with some other bank also it decreases one percent per year so now is 2 percent.

I bought these 4 for 250K (62500 each) and when I bought them in 2015 they appraised for 292K (73000 each).  I put 20% down on these.  I currently owe 180K so I have some equity.  I believe these are worth 80K each or more now.  Zillow and redfin have them quite a bit higher but i don't believe it.  The rents have always doubled the mortgage and I have no trouble renting them.  They are 2 bedroom 1200 Sq feet in good location near Knoxville.

I would like to keep growing and get more properties but don't have the funds for down payment.  I am a little nervous about the variable rates rising also.

I have great credit and a good stable day job.

Some questions I have.

1. Should I try to refi now and cash out equity to do another deal?

2. Should I try to get a fixed or non commercial loan?

3. Any advice as what my strategy should be moving forward?

Mike

[Travis Sperr]

@Mike Cox Whether or not you take out cash to do other deals is up to you, your risk tolerance and opportunities to invest the funds. 

Specific to the loan - I think you are best to lock in fixed rate notes, minimum term of 15 years.

Your strategy going forward - has everything to do with what you hope to accomplish!

Good luck!