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Category Archives: Difference Between Residential and Commercial Loans

Using Other Peoples Money to Fund Your Retirement

As you know interest rates are at an all time low. This is one of the best times to buy residential rental property (2 to 4 units). Anything above 4 units has to qualify for a commercial loan. You may not know this but commercial financing is not as favorable as residential financing. Commercial financing does not allow for 30 year term loans like residential financing. Plus, they will more likely require refinancing every 10 years. Additionally, commercial interest rates are typically higher than residential rates. All of this creates lower cash flow and more uncertainty for commercial properties. Over time what happens is residential rental properties with fixed mortgage interest rates and 30 year terms will stay fixed while commercial loans will have to be refinanced at most likely higher rates. In other words, over time the effect should be increase profit and cash flow for residential rental properties as compared to commercial properties. Buying residential rental properties can help fund a persons retirement with little risk. Who’s paying for these substantial benefits? The tenants. They are helping the owners buy their investments and effectively fund their retirement. Plus, this is one of the best times to buy residential rental real estate! Please contact us with any questions or help in this regard.