Originally posted by @Mark Jager:
So is this correct, that since you agreed to a balloon payment after 8 years you're planning on having 25% equity in the property via raised rents and principal pay-down after 7 years, and then you'll be able to re-finance with a traditional bank owned mortgage at 75% LTV? So if the bank will only finance for 20 years instead of the 22/23 years remaining and charge a higher rate you'd be presented with a scenario of either paying off the seller or cutting into your cashflow. I'm assuming when you run your anaylsis pre-purchase that the deal still makes sense under those terms? I'm just trying to fully understand the implications as I'm interested in pursuing deals with a similar structure.
Thank you for your question Mark. Since I own this property under my personal name and not my LLC I can have the option to refi for another 30 years with a fixed term that would qualify due to my cashflow on the property, My W-2 income from the bank, and my LLC income. If the cashflow was affected, hypothetically speaking, and Im still capable of refinancing. Its still something (The Property) for nothing (Use of my credit). Please ask more questions if I did not fully answer yours. I appreciate your thought process.
