WHEN TO DO
CONVENTIONAL FINANCING VS. COMMERCIAL FINANCING
Conventional is best when…
- The Investor wants to do a Lease Option vs. a Contract for Deed.
- The Investor owns less than 10 financed properties.
- The Investor has ALL the funds for the full 20% down before getting the money from the Tenant Buyer. (You can NOT pool funds with a conventional loan).
- The property could be a good one for a long-term rental IF the TB flakes out.
- If you need to get the best cash flow (you’ll get a 30-year fixed with Conventional)
Commercial is best when…
- The Investors wants to do a CD (they should know and be “ok” upfront with what we’re doing and know the property will be sold same-day on a CD)
- The Investor owns more than 10 properties or can’t get regular financing
- The Investor NEEDS to combine their down payment with the TB’s to have the full 20% down.
- The Investor feels OK with having to redo in 2-5 years or you’re super confident the TB will perform.
- The property is a little rougher and needs some work.