Commercial Loan Terms Analysis help for Multifamily deal

[Ray G.]

Hello BP gurus,

I posted this in the multifamily forum and may have posted there incorrectly, so reposting here while i figure out how to remove my other post.

In the process of purchasing a small commercial residential 12 unit multifamily deal. I'm pretty well versed on the non commercial residential side but this is my first commercial residential deal and i could really use help from the gurus to explain whether these terms make sense.

Terms:

Purchase price: $299,000

Loan Amount: $224,250

Loan to value: 75%

Term: 20 year with re-pricing every 5 yrs based on 5 yr treasury + 3.50 margin

Amortization: 20 year

Fee: $1,125

Rate: 5.50% for 1st five years prior to 1st re-pricing.

Questions:

1. How do i analyze the re-pricing every 5 years, is this similar to a 5 yr ARM?

2. What exactly is the 3.5 margin?

3. Since this is the first time i'm doing this, what questions should i ask for clarification that i'm sure i'm missing?