Hello,
I am looking to REFI our park. 60 pads institutional grade property. If you were refinancing would you get 7 or 10 year financing. I’m looking to sell in 6 years.
Thoughts,
Thank you.
10 yr as long as there is no prepayment penalty, always better to have more time on your side.
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I’m guessing you are going to do an agency loan. At the DSCR level you’ll need to be at for a refi, 7 years is the better move most likely considering your time horizon. It’s the same interest rate as of today.
Fannie Mae Small Loans Indicative Pricing as of April 02, 2024
For us, the Term isn’t as critical as the Amortization schedule. The amort can impact your cashflow greatly. I encourage you to run a 15-year vs a 30-year amort and see what it does to your cashflow. Personally, I never understand why a bank cares about the amort schedule (other than for interest-earning reasons), if the term is 5-years or less.
Anyways, @Manny 's advice was good. Go as long as you can on the term, given little to no PPP. For us, any bank that comes with a 5-year PPP is either negotiated or they lose our business. Having options and time when it comes to financing is key. We dont like being pigeon-holed.
That way you can sell, refinance, whatever. You have options. Also, if you need a lender I have one for you (as long as the loan is >$1M)
Agency loans have defeasance, which is worse than a standard pre-payment penalty. You’re going to want to go 7 years because of that. Unless you want to go with recourse at a higher interest rate.