My father and I are looking at buying some SFH that require work. We plan on buying properties that are not good for flipping, but make good rental properties. We plan on doing the sweat equity into these properties ourselves.
Also we are not opposed to putting some of our own money into these properties, but are having trouble finding local lenders to help us out with the leverage part.
We are going to purchase and manage these companies under our LLC which changes the financing into an area we are not entirely familiar with.
After talking to several local banks, about the best that the local banks have to offer is interest rates around 9% and 20yr mortgage. We both have great credit scores and assets of our own, but would like to limit the personal liability. Even a 25yr mortgage would make this much more profitable for both us and the bank, and lower interest rates would be beneficial also.
Just wondering what other ideas there are for this type of financing.
You have a scenario that most local banks don’t want to really touch. A mortgage broker who has access to a miriad of lendes will be able to help you better. There are programs for rehab construction that offer better rates.
Are you talking to big banks? If your credit score is good and you don’t have high debt to income ratio, then you should find much better deals from local small banks or mortgage brokers. Talk to few mortgage brokers or find local investors and have them recommend someone who works with investors.
We have a HELOC to purchase the property and fix it, then just need to get long term financing for 80% of the property value after we are done fixing it.
We are looking to get a 30yr. mortgage since the property is depreciated over 27.5 years.
Also I think that 9% interest rates are a bit steep.
Thanks
Tim
M T Homes Inc.
You may want to consider purchasing these properties individually in order to get better pricing and do a quick deed transfer into your LLC or Family trust at the closing.
Most lenders are more reluctant to lend to LLC’s becuase of liability.Find out if you can do a deed transfer at closing were you deed off and your LLC deeds on . I had no problem doing this for one of my customers with an “A” bank.
We had thought about going that route, but would really like the company to be able to stand on its own feet, meaning that it has the ability to buy, fix, sell, rent its own properties, rather than doing part of it personally. After some time, I think this will be done quite easily after we acquire more properties and the companies net worth goes up, banks will be more interested in doing business with us.
Just trying to find the best way to get to that point.
Thanks
Tim
M T Homes Inc.
I agree with you that when you have acquired more under your LLC you will defintaley have more leverage and buying power.
Right now .
Considering your FICO’s are very high and your debt-to -income ratio is Low.
We could do these loans in the low 7’s on 80% financing.
SFR INVESTMENT properties.