We are all in different situations when we first got involved in Real Estate or have contemplated getting in. For those who are involved in Multi-family units What type of loans have you all found most advantageous. Some of us have money to put down and others do not.
Of course it’s best getting an amortizing loan. Some of us use interest only 100% to get started and hopefully there is no pre-payment penalty, re-fi to amortizing loan.
What is everyone’s experience and do you remember the first loans you used to obtain your properties?
it depdns what the rate are doing.
the past I did more ARMs (5/1 mininum), but lately more 30yr. fixed since the interest rate are much closer together.
I personally like interest only loans; in the beginning of a 30 yr fixed so little goes to the principal it barely makes a difference. I have one property that I just past 5 yrs on a 30 yr. note and have only pay about 6% of the pricinpal.
pre-pays, I don’t worry about too much since I typically hold properties for several years (at least) although I like having a soft-pre-pay so I can sell if I want without worrying about it.
above 4 untis, you go commerical and pretty much its going to be a 20 or 25 amortization period period with a re-adjustment of the rate every 3 or 5 years.