Advice on Evaluating Several Loan Products

[Ben Sears]

We have a small LLC that began flipping houses almost 10 years ago. We're now evolving into the buy and hold market and I would like some help evaluating some different loan products that I've been offered by some of the local community banks. Our current portfolio is one rental with a long term tenant (financed through WF on a 30 yr note at 6.75%), one rental under construction (cash financed through a HELOC), and one more property under contract to close after the new year. We plan on purchasing 3-4 properties per year for the foreseeable future if all goes well. Here are some of our options.

These are all local community banks that only serve our seven county area:

3yr ARM @ 4.25% 2% max per adjustment with a 5% lifetime cap (lend at 80% ARV)

5yr ARM @ 4.75% 2% max per adjustment with a 5% lifetime cap (lend at 80% ARV)

5yr ARM @ 5% 1% max per adjustment with a 3% lifetime cap

5yr Balloon @ 5% no lifetime cap

Fixed 15yr traditional at 5%

Thanks for any feedback you might be able to provide. Until now we've always used the national banks with traditional 30yr notes.