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coreyp314
real estate investor
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different types of investment loans
Tuesday, February 20 2007 12:36 PM
I was just wondering for invesment properties that anyone on here has that they only plan on keeping for a short amount of time (2-3 years) do you guys normally go with a standard 30 year fixed loan or a ARM loan?
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Randy Hughes
SFH Master Advisor
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Re:different types of investment loans
Tuesday, February 20 2007 04:20 PM
corey,
if i knew FOR SURE that i was going to sell in 3-5 years, i would take the variable rate because it would be lower than the fixed rate.
Randy Hughes
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coreyp314
real estate investor
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Re:Re:different types of investment loans
Tuesday, February 20 2007 04:39 PM
Yea I am pretty sure that I have found my 2nd investment and I only plan on keeping the place for 3 years tops and am looking at a ARM loan but I have heard so many bad things about it. I was just looking to hear some opinions from different sources thanks.
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Marty Couch
Investor
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Re:Re:Re:different types of investment loans
Wednesday, February 21 2007 10:21 AM
Hey Corey,
Al ot is going to depend on what the terms of the ARM loan are. The things to consider are:
What is the start rate?
When is the 1st adjustment (fixed for 1 year, 2 years, 5 years)?
How often will it adjust after that (Monthly, every 6 months as most sub-prime loans do, yearly)?
How many points can it adjust each period (can it go up 1%, 2%, 3%, no limit)?
Are the rents in the area increasing enough to cover the spread if the rate does increase and you decide you want to hold?
In other words, if you have a property in an area where rent is going up 2% per year on average and you have a loan fixed for three years with annual adjustments every year after that not to exceed an extra 2% a year, you should be ahead of the ball game weather you sell or hold.
Also, if you do decide to hold when the time comes, you can always refinance to a fixed rate loan. Some adjustable rate loans allow a fixed rate conversion in the terms.
Make sure you are working with an experienced loan officer who has access to a variety of loan programs and can really help you focus on your goals.
I like working with Todd Hague. He is the owner of MFS Mortgage. If you would like to talk with him about options, you can call him at:
Office (847) 325-0062
Cell (847) 858-7830
Hope this information helps.
Marty Couch
http://www.PPLChicago.com
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