Hi,
Looking for some advice here regarding financing a 5plex for rental income investment.
I know of 2 ways to finance this deal worth $450k, those being:
- Equity from primary home: Rates are 3% , with closing costs at $11k. Will encompass closing costs with loan amount. We have no mortgage on our primary.
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- Take a commercial loan: With rates at 4.5% , 25% down ($112,500), 25 year amort, 10 year fixed later followed by 5 year variable at wall street prime plus .5% Loans fees .50 % of loan amount ($1, 687). No prepayment penalty. CoCR is 13%.
We make roughly the same net income per year in both scenarios.
My overall goal is secured cashflow.
I’m wondering if taking a home equity loan is the wisest thing. Rates are currently very low and I feel not taking advantage would not be the right thing. I feel uneasy knowing that I am using my primary home as financing OR
Take the commercial loan which again is low considering the times but I am forking 25% down worth $112,500.
Would love to hear anyone’s thoughts, suggestions or comments.
Thank you for your time.
