Evaluating Financing Options

On August 2, 2010, in Investment Property, by David Monsour

As I stated in the previous post, I emailed a few lenders to see what kind of lending options I could get.  Below I will summarize my options.  I this case there was one options that was far better than the other. I could maybe work it down a bit more but since we are theatrically buying this at this point I’ll stick with what I have.  Most of the time I pin the banks against each other for the best Rate. 

Note:  If the rental you’re buying is only apartments and 4 or less units you can get a residential loan that will have better rates and will be amortized over 30 years instead of 20.  This is ideal to keep expenses debt service (mortgage payments) as low as possible.

Adams County National Bank– I talked with Gary Rappoldt.  He had done my first two commercial loans when he was at Community banks.   I had good luck with him as a commercial lender so I figured I’d ask him first. 

They offered me a rate of 6.1% with a 5 year rate lock, amortized over 20 years with 20% down.  I was happy to see this when I got the email.  (Rates are subject to change)

Susquehanna Bank– This bank actually bought out Community Banks.  When the bank changed hands Kathy Powley took over for Gary Rappoldt.  She has been services my loans ever since.  We did a rate mod last year which was a great way of reducing my rate without a refinance. 

I was offered a rate of 6.5-7% with a 5 year rate lock, amortized over 20 years with 20% down.  However the property had to cover 120% of the debt service. 

If I, or a client of mine, follows through with this purchase I would go with Adams County National Bank for the financing.  This just proves the importance of calling more than one person for a loan, especially when dealing in commercial real estate. 

If you have questions about this property or analyzing another property, please contact me.

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