I have a contract on a 4plex that I’m going to buy in a Partenership with hard money. We just completed a rehab on a SFH that pocketed 50k. I would like to rehab the 4 plex then sell to my LLC. I have an average FICO of 720. What kind of loan do I need to buy in the name of an LLC? Where do I find it? I can come up with 20% down and Personal Guarantee the loan in my name. I just do not want the 4 plex to show on my credit as I am going to hold a rent in the name of LLC. Do I need to show personal income for the loan? Will anybody do a residential loan in the name of LLC? What if the LLC is brand new will there be issues with that? I can put the 50k in the new LLC to show it has Capital. Thanks
You’ll want to work with a local bank on this. You may not even need the hml.
Local banks can do just about anything as long as the property is going to cash flow.
You could discuss with the bank about putting the $50k into a money market or short term cd with them. With that there they may give you a rehab loan on the 4 plex and then just convert that to long term financing when done.
If you do use hard money you shouldnt need to sell to you llc. The llc can just refinance and payoff the hml. Having a new llc is not an issue with most banks. The loan will be done in the business name and report to the business if you have a tax id for it. If not, then the loan will be in the business name but report to your personal credit. Either way, your personal income will be reviewed and you will be a personal guarantor. Property will need to be rented as well.
What city are you in? What city is the property in? May be difficult if you are not in the same state.
Very much appreciated. I am in Phoenix and the property is in Phoenix as well. I want to do the hard money and sell to LLC because the partnership is something seperate. My partner wants to do just rehabs whereas, I am looking to buy and hold as well. If I have a personal house now (upside down). Will they look at my income, or the cash flow if it is fully rented when I go to sell out of hard money? Also is it just Local banks or do you think a Credit union could do the same thing. Would I need a business plan or is it just a residential mortgage?
Credit unions too.
A business plan would be good. At least a 1 page executive summary.
These wouldnt be normal residential loans because those are what would be sold off into the secondary markets and current have all kinds of guideline restrictions.
If I understood more about this I could possibly make additional comments.
This is not making sense to me…are you asking 2 different questions…you mention your personal house bening upside down…what does that have to do with being fully rented.
The simple answer is that commercial lenders will also look at your personal income in addition to the debt service coverage for the property. Properties need to typically be 80% occupied. (could vary per lender)
Ok so would this be considered a business loan or a commercial loan?
I have two seperate business’. One is a partnership to fix and flip. As you know it is very hard to sell properties for a decent price in Phoenix, so we got somewhat lucky in selling our first property. The 4 plex will be sold to my LLC as a seperate business. It will not be for the full appraised value so I am getting a deal with the LLC plus, my partner and I are making a bit of money on the fix and flip. He is just happy that he has a buyer already set up.
I brought my personal residence in to picture to better understand what they would be looking at as far as debt to income, as well as history with real estate. If they see my personal residence is upside down, are they going to think this is a good loan for them?
My main question is what are the main factors they consider in this type of loan? I am only familiar with standard residential loans and want to get my ducks in a row when I go into the bank. I want to make a great presentation to where they are gonna say if we don’t do this the next bank will.
You may want to develop a relationship with someone to coach and consult with you on this. This could be another investor, banker, mortgage professional, or anyone else experienced with this type of financing.