We’re an LLC trying to refi new construction at 362K. ARV is 455K to turn into rental property until market stabilizes or we can get a lease option deal signed. We’re being told that we can only get new loan in personal member’s names then deed over to LLC. Our current const. loan is in only the LLC.
Not crazy about using personal credit for the LLC as we are shifting focus from new construction and some REI into more REI and custom homes etc.
If we’re “forced” into taking personal credit, how do we keep increasing our REI’s when we have our own mortgage etc? Our FICO is around 690-705 between my husband and myself. Won’t our personal credit max out at some point? I want to be prepared and not hindered by having too much credit extended to us.
If you want a loan that is financed and titled in the LLCs name then you will need to do the refinace at a local bank, preferably in the area where the property is located.
When you speak to those banks, make sure that you ask for the commercial loan officer. The product you get will usually be a balloon note amortized over less than 30 years. Interest rates will be higher than what you may get in the wholesale side.
If you cant find a bank, then you’ll need to do a loan with a wholesale lender. These are what we as brokers use for our clients. Unfortunately, the actual loan cant be made to the llc, only to individuals. There are a couple lenders that will allow for this to stay titled in the llc (under certain circumstances). 95% of all lenders though will need you to quit claim it from llc to personal before signing a loan application.
Having properties in your personal name may not necessarily max your credit out. I’ve got clients with over 30 properties financed in their name and still maintain high 600-700 scores. Once you get up to 10 financed properties the # of loan programs becomes resticted. However, there are lenders that can finance you with unlimited properties. What usually starts to happen though is that debt to income ratios become maxed out. In that case, a reduced documentation loan such as “no ratio” would be an option for you.
Consulting with a mortgage professional who specializes in investment loans should be a goal for you guys to set.
Please let me know if you have any other questions.
WAMU will allow you to do the loan in the name of your LLC, but they do have a couple of stipulations.
1)The obligation of the note will remain a debt obligation of the individuals in the LLC.
2)Max 80% LTV/CLTV
3)LLC cannot consist of, or be owned by more than four people.
4)Must be a U.S. Entity.
5)Must be less than 3.0 Million.
6)The only eligible products are Monthly Option Arms, or Fixed Period 12-MTA ARM Products.
Hope this helps. The product is called Entity Vesting if you call WAMU and ask for any information.
Sounds like good advice. You cam quit claim it to an individual and then back to the LLC once the refi is done. Wamu only offers option arms and a lot of deferred interest. Therea are other options for financing if you deed to individuals then back to LLC. Commerical loans are expensive.
What Ron should also mention is that if you quit claim back to the LLC that this could have 2 outcomes you should consider.
Due on Sales Clause - Basically none of the residential lenders that you refinance with want you to title the property back into a llc after refinancing. If they do find out that you have they could call the note due. There are 2 views to this that most investors share.
a. the lender will never find out or inforce this
b. use a land trust instead.
I’m not advocating either, just letting you in what should have been mentioned.
I’ve heard that it’s possible that you could jeopardize the protection of the llc by moving them back and forth.