Thanks Gonzalo! This is in Pennsylvania. I would characterize the bank as a “regional” institution. We already have one loan with them already so we have a good relationship.
Agreed on dropping the balloon. I’ve got a call with them today to discuss just that - from a previous discussion, it sounded like they would do it. LTV was 25%.
These terms are pretty good. For such a small loan I would jump on it.
At 25% LTV, what’s the rationale for putting so much money down? I would try to borrow more money and get better terms. I assume your PP is $1.7MM? If you did a 65% LTV loan you’d be over the $1MM mark and could possibly get a sub 3% rate. Seems like free money to me.
With that much money down why are you going for a bigger deal?
Sorry guys, just re-read my previous post. 75% LTV. It is recourse and they took away the balloon, the rate just re-adjusts at 10 years. It’s locked in at 3.99% pending the appraisal.
I spoke with several banks, including another bank that we have a loan, but it seems like since COVID-19, some banks have done away with 10-year fixed rates. Regarding rates, I can’t imagine they could get much lower. And, considering our country’s current state, I can’t imagine them going much higher either.
Agree those are good terms. I did a $700k seller note last year at 75% LTV 4% fixed for 5 yrs and due in 5 but with my option to extend 3 years with a $50k paydown. I purchased at something over at 8% cap on in-place income so a 4% spread, 5% spread now with rent increases. Very easy to close and no loan closing expenses, so I’m happy with it.
Poharen - sounds like we are in a similar place. We purchased around a 9 cap on entry. Have raised rents $55.00 since, infilled with a few homes and added a garage rental. Our seller financed rate was 5.5% with a 10 year balloon. I don’t see any issues with the appraisal. Very happy to with the new terms and hoping this bank will want to continue to work with us in the future.
First National Bank of PA. They are a regional bank in PA and only do loans in certain areas within the state. We’ve used this strategy multiple times. Get a list of the local banks that are in close proximity to your park and just start calling. You’ll be surprised how many will talk to you.