Anyone familiar with commercial loans or consolidation loans?

[Matthew Otero]

Hi everyone. I’ve been researching what I can and realized I haven’t tapped into the BP community where someone might be able to share personal insight. My partner and I have a few SFRs and a few Multis with mortgages in our names. We were thinking about rolling them all into a commercial loan to consolidate and make it easier for the bank to lend to us. There have also been talks with private lenders to do a consolidation loan. Ultimately we want to tap into some of the equity from our oldest loans for future acquisitions. Any insight would help and be appreciated.

[Andrew Postell]

@Matthew Otero I don't know your  specific finances but I usually recommend ANY partnership to use commercial/portfolio loans.  The main reason is because with a "conventional" loan you are on the hook for 100% of the payment personally - even with a cosignor.  With a cosigner EACH borrower is responsible for 100% of the payment.  So if you are splitting the profits, but responsible for 100% of the payment, you are going to look really bad to some lenders pretty quickly.  A commercial style loan solves that issue.  Since you aren't personally liable for the loan, then it doesn't matter if you split the profits.  I hope this makes sense how I am describing this.

The other loan product you were describing is probably more accurately called a "blanket" loan.  Meaning a loan that covers multiple properties.  I would not suggest that style of a loan early on.  Mainly because a lot of those products have "release" clauses.  Meaning, if you take one property out of the blanket, you pay a penalty.  Sometimes the penalty is that you have to refinance all the other properties in the blanket.  So commercial loans = good.  Blanket loans = maybe.