I have a quick question that I am sure this community holds the answer to.
Recently my business partner and I secured a large bit of funding. We want to start building a portfolio of multifamily residentials with this capital. We plan on using the BRRRR method. One problem that we have run into is the fact that banks do not want to lend money to newer LLCs. Given that we are just starting out, what options do we have? Is there any common loophole that I am overlooking?
You may need to go with hard money while you're first starting out. It's more expensive, but they'll lend to newbies. Once you have a track record, you can start to take advantage of more conventional lending.
You should always have your last "R" strategy lined up before buying the property. If you cannot refinance, you may find yourself in a loan that is not affordable or eats up your cash flow. What type of funding did you secure? Is it short term or longer-term? Are you looking to keep holding the properties after you rehab them?
@Dan Barli We will be holding the properties. The funding is private investment at 12% APR. There is no time constraint on the investment however, we want to be timely on the returns as the plan is to keep reusing the capital. The investor is in with us for the long run.
@Michael Albaum I understand hard money loans as a strategy to buying the house in the first step. I am talking about refinancing after the buying, renovating and renting!
That's great Xavier! You should speak to some commercial lenders and look into certain SBA loans for newer businesses. That may be able to help you. You can of course also deed the property to your personal name and close with traditional residential lenders.
@Dan Barli This is awesome! Thank you for your help!
My pleasure. Keep us posted on your progress!