All Forum Posts by: Anna Swartz-Lopez

Part of the problem Ryan may be the type of property. Anything under four units is not commercial, so it sounds like the property right now is not technically commercial, but after you make the changes and there are 5 or 6 units, then that would be a commercial property. Lenders usually focus on one category or the other, and it sounds like the property is currently in one category or type of loan product, and the work you want to do on it puts it into another loan category, or a different type of loan product. 

Yes, 5.75% on a long term mortgage for an investment property is quite good. For a property held by an LLC or S-Corp, the rates are higher. Some people forgoe the LLC in an attempt to get a cheaper rate, but if you are holding the property for investment purposes and you do not live there, that is opening yourself up to huge liability (and if you do live there, it's still a liability, but at that point you cover yourself with insurance.)

Also remember that when you are evaluating an investment property, the interest rate is only one factor to evaluate. I know we are all trained to think about interest rates because we are accustomed to talking about home mortgages, but when you are looking at investment property, other things matter more. You should focus on the down payment plus the monthly payments. Don't walk away from a property that cash flows because you are startled by a higher interest rate.