My partner and I have a property that we originally used a interest only construction loan to buy the property and rehab it with the intention of selling the property. Now a year later and having extended the original loan an extra 6 months, we are going to rent the property and are looking to refinance the loan into a 30yr fixed conventional loan. The bank we have the loan and our LLC account with is only offering us a 1yr balloon loan with 15yr amortization. He also told us that they do not offer conventional loans to corporations since we have property under LLC we setup. I am wondering if I can go somewhere else that will be able to give us the loan we want, or is this guy telling me the truth and as an LLC, we cannot do a fixed rate conventional loan. I personally think he wants to keep us refinancing with him every year so he can keep making money off of us. I know this has to be a common scenario, and am interested to hear what some others have done in this situation.
He is generally right. Corporations and LLCs don’t get 30 year conventional financing. But you should be able to get a 5 year balloon with 30 year amortization to help cashflow. That is why I buy single family houses as a person. That way I can get a 30 year fixed. When I refinance into a blanket loan I generally get 5 year balloon with a 30 year amortization.
I wish I would have known that before starting LLC and going that route. I guess you live and learn. Would it be possible to refinance the original loan into my partners name alone, thereby allowing us to lock in a 30yr.? Also we are going to just do rentals from here on out. Is it bad practice to buy all the properties under a LLC for this very reason?
Would it be possible to refinance the original loan into my partners name alone, thereby allowing us to lock in a 30yr.?
The lender is probably going to require either 6 or 12 month seasoning with your partners name on title.