20-30 year mortgage for a multifamily property purchase?
Was told recently that you can’t get more than a ten year mortgage for commercial properties. I happen to think NYC/Brooklyn will be just fine and would like to invest however most cap rates only make sense with 20-30 year mortgages. Is it possible to get a long term mortgage for a multi family property? How?
[{"id": "gm2ovwq", "text": "Minimum $1m loan amount through Fannie", "replies": [], "depth": 1}, {"id": "gm2oyf5", "text": "You can but it will need to be a 4 family or lower anything over 4 is considered commercial and you will get a commercial loan, typically they're ARMS. 5/1 amortized over 20 and possibly 25yeara typically", "replies": [], "depth": 1}, {"id": "gm2u0qt", "text": "It\u2019s definitely possible to get a long term mortgage on multifamily. I got one a month ago and am in the middle of another. Have you thought about using something like FindTheBank.com or a capital advisor?", "replies": [], "depth": 1}, {"id": "gm2v4qh", "text": "What I think is happening is that you are confusing \u201cterm\u201d with \u201camortization\u201d. Most commercial loans are 5-10 years in their term but 25-30 years amortized. This means your treat the loan as if it would be a 25-30 year loan but in 5-10 years you have a balloon payment, where you need to either sell or refinance.", "replies": [{"id": "gm2wqbw", "text": "This is the right answer.", "replies": [], "depth": 2}, {"id": "gmbbwez", "text": "Is it possible to refinance after 10 years for a longer term or do you just take another 5-10 year term?", "replies": [{"id": "gmbp015", "text": "Likely not. What are you trying to accomplish?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gm3dfal", "text": "There are plenty of 30 year amortized loans, but few with 30 year terms.  I've seen 20 year term loans on multifamily, not always easy to find but they do exist. 10 year term loans are everywhere.\n\n*\"however most cap rates only make sense with 20-30 year mortgages.\"*\n\nCap rates are not impacted (nor predicated) by the term of a loan, only by an investors desire for return / cash flow.", "replies": [], "depth": 1}, {"id": "gm4gpjx", "text": "Both Fannie Mae/Freddie Mac and Life Insurance Companies can lock rate at 20+ years on a 30 year amortizing loan.  It will definitely cost you in rate, but it can be done.", "replies": [], "depth": 1}, {"id": "gprrahq", "text": "The short term of 5-10 years is because longer terms are more risky for the bank, hence a higher interest rate. It's also when most borrowers will want some of that money for something else. \n\nYou'll be locking up much more than 20% down payment after 10 years of paying down the loan. The amortization schedule runs for much longer, 20-30 years, for the borrower's cash flow. \n\nPlan on the refi in the 5-10 year range, based on the real estate market value and new interest rates. You'll take the loan down to minimum down payment and use the cash out for something else.", "replies": [], "depth": 1}]