All Forum Posts by: Connor D.

Hi Kevin, 

Thanks for the insight on the due-on-sale issue; I was not aware of this change. However, for this property, it is a 50/50 JV, so unfortunately, I think I have no choice but to go down the commercial path with a personal guaranty.

Best,

Connor

Hey All,

I recently purchased my first duplex using short-term financing and am now in the process of refinancing into a portfolio loan (as the property is held in an LLC).

I have found pretty favorable terms (4%, 80% LTV, 25-year amort, no balloon, adjustable every 5 years with caps). However, at the closing table, when I received the documents, I was surprised to find that the loan contains a demand feature that allows the lender to call the note due for any reason (not just in an event of default).

Is this common for commercial loans, and do you have any tips for convincing a lender to remove this provision? 

Thanks!

Best,

Connor

Hi all,

This is very helpful - thanks for the insight/ideas!

I guess my question is around the concept that a deal could be a 10% CoC with a 30Y mortgage, but a 5% deal with a 20Y mortgage. Does this make the deal worse? No, it just makes the threshold to do a deal much higher if you use a loan with a shorter amortization profile. Just wondering if this is how folks look at it (and still shoot for 8-10% CoC with a shorter term amortization).

Hey all,

I am in the process of searching for my first deal. While I am generally inclined to hunt for an 8-10% "base hit" cash-on-cash return, I have a question as it relates to financing. I am inclined to do a commercial loan so that I can place the property in an LLC at purchase.

That said, my understanding is that most commercial loans are on a shorter amortization profile (i.e. 20 years). With the shorter amort profile, there's a big drag on the CoC return.

Do you still use CoC return as a target if using a loan with a shorter amortization profile, or do you look differently (e.g., using an IRR)? I may also be looking at this the wrong way, so forgive me for being new!

Thanks!