Commercial properties - shorter terms don't give you concern?

[Jason Turo]

I realize there are commercial loans amortized over 30yrs but they still hold shorter terms (~5-7yrs).  This raises the question, how do you position yourself at year seven to not risk a potentially higher interest rate or need to sell the property to pay the balloon payment when you do not have control over what the property will appraise for in seven years?  Doesn't this sound familiar to a dark recent past?

[Daniel Dietz]

One interesting way to hedge against too much rise is to 'refinance early'. What I mean is say in 7 years, rates have gone from 5% to say 8% and look like they are going to keep rising. Even though we would not NEED to refinance then, we could if we thought looking in that rate out to 'year 17' at which point we will nearly have them paid for (we are making extra payments to increase cash flow at retirement time). 

Dan Dietz