High Interest Loan for Buy and Hold
Spent most the winter looking for a good investment but the markets been very slow. Finally found a very well maintained three family with a 10% cap rate, offer has been accepted and we're moving forward to close. Price is a little high for my budget, but I have a broker who promises to get me 80% LTV on my mortgage, which would leave me plenty for closing costs and cash reserves. The problem? 7% Interest rates. This broker does alot of commercial loans and I was expecting a higher than prime rate because of it, but my income/credit are perfect (which apparently doesn't matter much in commercial loans).
Is this rate too far out of the ball park? Property will still cash flow but will take a sizeable chunk out of net income. Is it a viable strategy to close and refinance to a conventional after building some equity? We're moving quickly to close and I don't know anyone else who can do 80% LTV 30-year fixed.