intrest rate 10% down commercial purchase?????

General Real Estate Investing
1

I am in the process of shopping for a loan for a six unit apartement building here in CA. The purchase price to be 635k. I am looking to put 10% down and from reading postings on this site, I think it should be possible with my 741 fico.

The problem is this. A couple of lenders have quoted me rates of about 7.1-7.5% and a couple at 9.5-10.5% all fixed. I was ready to go with the 7.1 offer until the 10.5 lender told me that 7.1% was impossible and the other broker was just baiting me in.

I need help. Is it possible to get a rate of 7.5 or lower with a 10% down payment and not pay a ton of points?

Also the rents are not up to market so even at 7.5 they will create a negative cashflow especially with the one current vacancy. However, based on comps. rented at market rates the property should appraise for +100k.

Current rents: $4081 (1 vacancy) projected rents: $5700
3x1bed $2400 per mo.
3x2bed $3300 per mo.
current taxes:$4329 per year
current ins: $ 1596 per year

2

As a mortgage broker myself who does a ton of these types of deal I can tell you that 7.1-7.5% is good for this market. The 10% down program that you have been told about should have a provision for you to use your personal debt-to-income ratio if in fact the property does not cash flow.

An average rate for this type of deal is usually between 8-9%. You can get a lower rate but it will probably require more down.