Here is the advantage of the variable rate to you vs your banker, lets say 7 yrs in rates drop to 2.5%, guess what you can call your lender and refinance your loan and get that 2.5% rate locked in for 5 years. 

@Bob Metry he would have to have lived there as his primary residence for at least 2 of the last 5 yrs.

The specific niche that we cater to are adult males, 40-65 yrs old, that suffer from varying degrees of cognitive impairment.

The specific niche that we cater to are adult males, 40-65 yrs old, that suffer from varying degrees of cognitive impairment.

200k from a private lender @ 10 % interest rate,1.5 origination fee, 200k+ from personal savings. 5 yrs balloon payment with the option to refi at anytime and no pre-payment penalty.

It also comes down to the business model and the related hold period.One of our advisors who has been in the multifamily space for over 35 years used to "syndicate" (the term did not exist in the context it does today) but hold the properties for 15-20 yrs.

I use a 'waking away amount' eg on one property-replacement cost 2 mil-paid 650 3 yrs ago now generating 130k gross annual income so I have it insured for 1 million + 12 mo income loss at which point I would 'walk away'.

All other ones see LLC and immediately go over to the commercial lane with 10 yrs being the longest fixed they’ll give. 

@Hardik Solanki, I would suggest you and your friend decide what you want to be doing in 2 yrs, 5 yrs, 10 yrs, etc, and how involved you want to be in RE.

We need to be part of the vetting process as a major requirement should be at least 10 yrs of construction experience in building homes!