Loan for a 6 Family Rental Property? 15 year at 5.25%?

[Alex Staunton]

Hi, I'm currently under contract to purchase my first rental property,  a 6 family in Asbury Park, NJ and I'm trying to secure a loan.  Although I've looked (and made lots of offers), I didn't realize that it was a whole different ball game trying to secure a loan for a multi-family vs when I bought a condo as my primary residence.

I was hoping for feedback on the terms below and if they seem reasonable?   High level, it's a 15 year at 5.25% and I'm paying a point origination fee but the full loan details are below.  It's currently fully rented at $9,007 per month ($108k per year).  Taxes are around $13k.  The owner estimated the costs, utilities, maintenance, and repairs to be approximately $35k per year as he pays all the utilities for the tenants.

[Greg Horowitz]

15yr fixed loan for 5.25% is reasonable in today's market. Does the loan amortize over 15yrs as well? If your goal is to pay off the loan and own the property outright in 15yrs then this is good. However, if you are looking to increase monthly cash flow to earn a better return then I would suggest looking for longer amortization (25 years is typical) and possibly 80% LTV. Valley National Bank is willing to get to 80% LTV in certain areas of NJ.

As far as the 1% orig fee, this is somewhat standard although you may be able to negotiate them down. Try to push back for 0.5% and see if they will budge.