When if Ever Does 10 Year Interest Only Loan Option Make Since in a 30 Year Fully Amortized Loan

Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one rental at a time

back with his good friend and someone

who’s helped me a couple of times with

some lending mr stephen dao from

velocity mortgage how are you doing sir

oh i’m doing really really well how are

you i’m doing great hey one of the

things i want to talk about here is a

option on your loans that let’s be clear

i did not take advantage of and i

personally probably wouldn’t take

advantage of but i do think it makes

sense for some investors and i don’t

want to not talk about it just because

it doesn’t work for me

right uh and that is you offer obviously

30 or fixed

right i took full advantage of that

multiple times

but you also offer the ability for the

borrower to select upfront as i


anywhere from one to ten years interest

only and then the loan will recast at

the end of that period do i have that


correct uh but as uh pertains to the

interest-only period it’s a minimum of

five years you could pay only the first

uh year if you’d like um but there’s no

difference in cost or or or um fees or

like that so i always say pick 10. it’s

always good to have it and not need it

versus need it and not have it so it’s

like yeah you know what i mean if things

are going well paid the fully amortized

but it’s not because it’s the same cost

and everything else so if you do opt for

the 10-year interest only but it’s


a tool to be used in certain situations

for specific bars but yes i i mean for

certain you know situations and and and

and borrowers it may not be the right

tool but yeah we’re going to be just for

cash flow yeah we’re going to go into

this a little deeper but i almost forgot

the marketing spiel did i do that but

that’s okay again

uh but what we talked about is it’s not

off topic i think so i don’t think the

yeah go ahead do the marketing charts

go do the marketing thing so we done

although i worked very happily for

velocity morris capital all the ideas

and topics discussed on this channel

that of my own so let’s keep it going

yeah so back to this this uh product

because again i think it was warrants

talking so again uh the minimum is five

years so you can’t select one course

okay see all these things because i

didn’t select it i didn’t know uh so you

select five to ten years you recommend

if you’re going to do it do 10 years

and you know as i sit here looking at it

as someone who has this pile of monopoly

houses it’s not an option i would want

but i got to remember i wasn’t always

here right there there was a time in a

market uh where i was finding amazing

deals but they were mainly pretty heavy


right right there was a time where you

know i was getting properties where the

act of

rent were pretty routinely 30 under

market right the landlord didn’t care so

you know when i when i look at these

products a

i mean there was one deal i know i would

have done in like

2011 or 12. uh i would have loved the

bank blanket loan

because i could have just bought

everything from this seller at one time

as opposed to trying to put it together

over a freaking year

but that would have been a great time to

use the i o um right thanks for better

cash flow where you’re trying to

stabilize the property that’s when you

need the payment release during that

period and so and it gives you the

flexibility so if things have cotton up

and you’re down stabilized properly you

got new renters in you know higher rents

now pay fully amortized or whatever so

it does allow for the flexibility of

cash flow so i just want to make sure i

understand the loan so i don’t

misrepresent it so i’m just going to use

rough numbers right correct me where i’m

wrong let’s assume it’s a 500k loan

let’s assume based on my credit when i

buy the the interest rate is seven

percent i’m just making this okay

okay so i have seven percent interest

only for ten years

yep then when it when i start my 11th


uh the loan recast as 20 year amp

because i bought a burger correct for

the remaining balance correct

all right two the interest rate stays at


hundred percent correct okay

uh and it basically the only thing that

changes is my payment i don’t have to

come back to you and recast a loan

new loan docs nothing nope it’s a

30-year amortized loan in a sense uh the

rate is 30 or fixed right

if you decide correct but if you decide

to pay interest only for the full first

10 years then that’s at that point

you’re still alone the beginning 11th

year that’s when the payment gets

recasted otherwise you should have that

option of 30-year payment and or

interest only for the first 10 years so

so yeah heavy fixers would have been

something and

actually what so this would have made a

lot of sense to me again when i was

growing right you go through a growth

phase and you go through it kind of like

not that i’m done but it’s like right

i’m being pretty picky

and uh but you you but you can yeah


i have that luxury

right sir yeah so i you know

it’s probably a product that i

i wrote off as i don’t want to bring it

to my audience

probably too quickly because i i

sometimes forget where i i forget where

i was where you started yeah

and you could have used that extra

little kind of help and not stressed so

much it’s just like oh like just you

know ketchup soup and like you’re just

trying to make your money go around yeah

where’s the money gonna come from to pay

all the juggling of all this yeah so the

cost of capital if you can keep that

down and obviously the monthly payments

uh when you’re needing the you know most

uh payment relief in the beginning

especially as a brand new investor you

know just getting off the ground so in

some cases and that’s why our arb

program is an interest-only loan program

so it does help the beginning investor


with that as well so

it can be a useful tool just got to be

understood correctly and not like maybe

thought of in uh the

save all be all hey if i’m doing numbers

only on interest only payment you’re

gonna be sorely hurt and you don’t wanna

you know make sure you do the work and

do the number two


if you’re one of my students you better

write that thing out as fully amortized

if you want to make a business decision

because it’s value-added right let’s at

least make the acquisition with a full

payment okay no no cheating no this is

back to my arm blow up i had a big rant

about or just for eight mortgages the

other day i’m like

don’t do it don’t do it

well i think it was one of the videos

you said uh it seemed like a good tool

but you might be hanging onto the hand

grenade or something like that yeah

that’s adjustable right that’s exactly

what i think an adjustable rate mortgage

is because i’ve been doing this a long

time i had five year seller finance

deals you have no idea how fast five

years is right you’re working on it like

i had an apartment building with five

year money on it

i had to recycle tenants twice because

they were so low you don’t go from where

you are to where you want to be in one

jump you got to go through

right and that five years just came up

and it’s like oh it’s crazy well this is

why i think that 10-year period of

interest only yeah is very still helpful

because it’s like

an option of 10 years of interest only

when you need it it’s like a safety net

and so then

typically when people do need payment

relief during harder times then they

have to

resort to

you know hard money sometimes and so

then or bridge financing and then you

got to pay more closing costs and now

that’s a two-year or under loan and so

it’s just a short-term loan as well so

again the best of both worlds

flexibility of paper relief and then

fixed rate for 30 years yeah folks if

you want to get involved in any of this

at least ask more detailed questions

about your situation your deal uh

stephen how do you want them to reach


please email me at sdao velocity the

word mortgage dot com um in the subject

line just put the acronym o-r-a-a-t

in the body of the email

maybe just a brief description of what

you’re looking for as far as financing

uh property type address would be great

if not at least city and state of your

mid fico score and then best number to

reach your back hat and typically 24 to

48 hours i’ll be in touch let’s see it’s

friday this video is going to go out

friday let’s uh let’s see if we can’t

get 10 or 15 emails and let’s blow them

up over the weekend

i feel like an indentured servant to uh

oh or rat uh but that’s okay no the

people been great i mean really just

quality uh listeners um and people just

trying to you know see what’s what get

to that financial freedom they’re just

you know they’re and a lot of them are

really doing the work and they’re seeing

the fruits of their labor just like

larry i don’t want to give you know get

get too much into it but yes i mean

they’re they’re making it happen and

yeah he’s he’s sitting pretty uh pretty

pretty pretty nice so far from what i

could see so knock on wood we’re gonna

take that one down but yeah otherwise

good luck larry

yes sir all right buddy thank you very

much just been a lot of fun s dao at

velocitymortgage.com remember subject

line only five letters

o-r-a-a-t put everything else in the

body of the email thanks bud thank you

sir appreciate it

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