If you've been reading my email for a while, you know that one of the biggest benefits of owning and investing in residential real estate (homes) is that you can get long-term fixed-rate financing. Being able to get a loan fixed for 30 years is crazy. First if rates go down, you can always refinance it to a new 30-year. But even if the rates never go down, then over time you're paying this flat monthly payment back with cheaper and cheaper dollars (because of inflation). It's a win-win.
The issue with commercial is that most of the time you're only going to get a 5-year fixed loan and they calculate the payments off a 25-year payback instead of a 30, so the payment is higher overall. Since we've now learned the painful lesson that rates don't just go down and stay down forever, I'm nervous. What happens if, 5 years from now, rates are sky high, my loan comes to an end, and I have to refinance at those levels? That's going to suck.
Enough for now. Have any questions about this deal? Or want to talk through your real estate plans and how they jive with the environment we're in? Reply and let me know. I'd love nothing more than to share some insight and help you make a good decision.
