--174.201.x.xxx

Payments are figured using a 20 amortization and unpaid note balance is due in 5 years. --172.58.xxx.xx

Like GKarl said. Note is due in 5 years, but payments based on 20 year amortized loan. So, within 5 years you need to refinance, sell, renegotiate the note for extra time, or pay off the loan some how. --50.45.xxx.xxx

20 year amortization and print the amortization schedule and at the end of 5 years the balance due is what you would owe,no additional interest.Balloons are dangerous,I would not buy a house with a balloon unless I was going to increase the payments to a 5 year amortization and have it paid off then.We could be in a bust again in 5 years and you may not be able to refinance it --72.231.xxx.xxx

Balloons are very common with commercial mortgages as banks hold these loans on their books rather than sell them on the secondary market. They balloon so the bank can pass along any increases in their cost of funds. All of my loans except one are commercial. I wouldn't finance a residential mortgage in that manner; there's no need to. --172.58.xxx.x

GKARL,that is part of why I never got into commercial,just plain scares me and I always felt I could be the best in my area at residential but if I got into commercial I would be dealing with pros all the time and not have the advantages I have in residential --72.231.xxx.xxx

The nice thing is that these are commercial loans, so easy paperwork. --131.151.xx.xx

I sometimes wonder if he had been a slightly more conservative REI if he'd have ever gone bust and gone the way he did and achieved the level of success he had. --173.19.x.xxx

commercial notes are invariably ballooons and are usually sold and not carried as balance sheet loan - so Karl is partially correct- I have done balloons with some banks who carried the paper but most loans done were cmbs. --166.137.xxx.xx

not sure why Sid continues to invoke religion into a LL question & answer....perhaps like Ramsey he has not paid his bills in the past so resorts to a justification of why he is/was a deadbeat and didn’t do what he promised to do. is there a commandment for that (?)...most here make a promise and keep it. without having to go to church every sunday...lol. --166.137.xxx.xx

Sid. I have done balloons for 30 years on hotels & rentals...the only risk is interest rate risk. If you have made payments as agreed then you will always find lenders to rollover the notes. If you don’t pay as promised then you will get hurt, as ramsey did and it appears yourself...keep the religion to yourself and pls make rational responses. --166.137.xxx.xx

Ken, I have found non-pro's playing in the commercial area and my last deals have been the best involving distressed sellers. Folks get in trouble every sector. To be honest, I wound up in the commercial area merely by chance. To me the interest rate risk is offset by the ability to force equity by managing the property better. Like everything else, you have to buy at the right price. Since I came late to real estate investing, this allowed me to scale much quicker than I otherwise would but I agree caution is in order as well. I think strip malls and stuff like that are far more sensitive to economic changes. I don't know how some of these mall owners are going to roll over their debt given the death of retail. In their case equity may have been forced the other way. --64.121.xxx.xxx

Barb, what you said has been my experience. Paperwork and processing goes quick and easy. In my experience, it's because of a established business relationship. My banker comes to me and the last few closings were done in my office. I recently locked all loans at 4.75% for seven years. I plan on paying down at least one loan quite a bit during that time just in case. Whereas I think interest rates are going to climb, there's a limit how far they can go without burying the entire economy given the levels of government debt. A huge spike in rates would most likely result from collapse of the dollar and as long as oil trades in dollars, that's unlikely. --64.121.xxx.xxx

big stretch in that last post Karl --166.137.xxx.xx

Pmh, please explain --172.58.xxx.xxx

BRAD --68.50.xxx.xxx

BRAD --68.50.xxx.xxx

Pmh: Treat other as you would like to be treated. That is also from the Bible, as well as just a very good way to live and do business. I think you are a little out of line with some of your criticisms. I think Sid's advise is sound - certainly as much as others'. To each his own. Take what you like and leave or ignore the rest. --68.10.xxx.xxx

--24.45.xxx.xxx

Chris, where are you getting fixed commercial loans? --172.58.xxx.xxx

As to the borrower being slave to the lender, there’s nothing religious about that - it’s a fact of borrowing money. If you have ever found yourself in a situation where you were struggling to make payments due to decreased cash flow (think late 2000’s) then you understand exactly what it means. --166.137.xxx.xx

All I can say it that I’m glad I started the process of re-financing the mortgage a year in advance. It took months. If I had waited until I only had 3 months I do not know what would have happened. We had ( and still have) great credit, assets, etc and we still had problems at that time. --24.177.xxx.xx

I get 10 years on my commercial loans. 5 years fixed, 5 years adjustable. Most banks will give you the extra 5 years to make it a 10 year term. --174.234.xxx.xxx

Decided to stay where I was. --71.75.xx.xx

Decided to stay where I was. --71.75.xx.xx

Pmh [TX], I have no idea why you felt the need to attack Sid for his views. He was right on the money...and it was a perfectly reasonable response for/from anyone thinking in a rational manner. Maybe you need a drink. --50.45.xxx.xxx

PMH(TX), wow, did someone from the church hurt you! Sid, I agree God is good and following his principles will surely keep us out of danger. However, because of his loving Grace, he will always hear our cry when we fail and do things on our own. I try to seek God in everything I do. He is the reason I am who I am. All belongs to him. I praise you Jesus. AND I pray for PMH (TX) that he will find you in these end times. Wrap your loving arms around him and provide him and his family with what they needs. You own it all Lord!. Thank you for PMH (TX). Love you! --24.179.xx.xx

Balloons are a way to finance a single property for a set period of time. My bank keeps them in house, so it means I don’t have to deal with a third party. --64.251.xxx.xxx

--24.45.xxx.xxx

Point is we don’t need religion invoked here on a LL business board....I am “blessed” by those who are concerned about my soul....and by those rejected applicants who hope that by signing that on emails or at end of vetting calls hope I will ignore their faults...in god we trust, all else pay cash..lol..... --104.218.xxx.xx

the reason NC rates are higher on longer term notes is bc interest rate risk. I have negotiated 0.75 to 1.00 fees. always negotiable. not sure why anyone scared of balloons. has always been standard for commercial notes. usually 5 or 7 years, longer terms possible with higher rates. invariably Libor + the plus is what you negotiate also. Those of us who pay our notes as promised don’t need to use religion as excuse why we shouldn’t or couldn’t.... --104.218.xxx.xx

Beth. probably at end of 2008 for you...there would have been no problems 2007. remember the great implosion...$ got tight. It wasn’t that borrowers weren’t paying it was that investors in cmbs notes were getting more cautious. ....liquidity at that time was also big issue. I had to rollover a few hotel notes at that time and it was dicey & expensive for short term. it didn’t matter what your payment history was so much. the markets were locked. to all: you may borrow from local banks but they use investors to buy & back their loans. in a crunch they have less $ than the big banks. big banks have more resources. they will also offer better rates. --104.218.xxx.xx

My interest rate and terms are excellent though, however, I figure in seven years when I'm due to renew, I may just cash out of everything depending on where things are. --207.172.xx.xxx

My experience has been big banks don't want to deal. I got turned down on my initial commercial purchase by WF and I turned to my credit union. Perhaps the loan size was enough for them but most everyone around my area deals with local banks ad credit unions on commercial. For the most part, we're talking about 5-12 units and mixed use. Hotels and such probably offer a loan size that more feasible for the big boys. --207.172.xx.xxx

so Karl you have recourse loans. cross collateralized loans means you have other properties supporting the loan(s). Not something I would suggest although I did have to do that for interim loans on balloon commercial notes renewing end of 2008 and in 2009 bc of the great implosion. did refi out when the commotion started settling down and lenders & investors in cmbs notes had liquidity again. hopefully that will not happen again soon. --104.218.xxx.xx

Yes. I have recourse loans for sure. Are you avoiding that altogether? --207.172.xx.xxx

yes. local CU which has local investors will be more open to loans such as what you may want. but you will be paying higher rates. on personal side I have done refis with WFB on properties as low as $300k valuation. when I talk about hotels I am financing, for my day job, $30m - $50m. but what I am trying to convey is the $ is out there again and all open to negotiation on terms. local investors and cmbs note investors are out there. They always have been. don’t flub off the big banks. They have investors wanting to front $ also.. --104.218.xxx.xx

Not sure what you think I am avoiding (?) --104.218.xxx.xx

I always do non recourse loans. --104.218.xxx.xx