I’m in the process of selling two 4 plexes and purchasing a 28 unit apt. complex. The units are below market rent and the current rental income is about 167K on a 1.8 million dollar property. We have done a rent survey and I anticipate that we can raise rents about 100-125 per unit once we have put about $50K into updating the units. I can put down 30% and my spouse and I have very good (750 Fico) credit, plus decent assets and income. I’m new to the commercial loan market, and I’m finding a lot of conventional lenders are interested in making a loan but want 35% down. We would prefer a 5-10 year fixed rate ARM with a 30 year amortization, since short term rates seem all over the place. One lender (GHM Commercial, aka Pacific Coast Mortgage) that I found through c-loan has said they can do 6.5% fixed for 10 years, but they want the loan to be 50% recourse and there are substantial prepayment penalties for the first five years of the loan. There are no points, though and their fees seem reasonable. I’m wondering if this is a decent rate or if I could find better, and if the recourse funding should scare me off? We have sufficient reserves that the only scenario I could see where we would have trouble carrying the property is if there was a massive earthquake (property is in Fresno, CA).