BRRRR, LLC, and Balloon Loan vs. Conventional Mortgage

1 Reply

Hello Everyone. I am new to real estate investing and had some questions. I currently own a commercial rental property valued around 125k free and clear in my name personally. I have a good credit score around 800, about 60k equity in my primary residence and annual income around 125k. I am looking to take an equity line of credit on the commercial property to purchase a single family residential property in Virginia, where I live. I am using the BRRRR strategy and hoping to not leave any money in the deal so that I can continue to purchase more properties. For purposes of limiting liability and also creating the potential for expansion, I was planning to purchase the property in an LLC. (The LLC is new and I would be signing as a guarantor) From what I am hearing from lenders, I only really have two options to consider. If I refinance in the name of the LLC, I will be looking at a 5 year balloon loan on a 25 year amortization schedule. If I refinance in my name personally, I would be able to look at a long term conventional mortgage.

1) Are there any options out there for a long term loan (20-30 year) from a lender for a rental property owned by an LLC?

2)   What has been your experience with your lender to just keep rolling your loan over into new 5 year balloons every 5 years?  I am not a fan of the risk involved in the 5 year balloon loan being called due.     

Any thoughts or advice on anything else I might be missing is welcomed.

1. I'm sure there's someone somewhere that would take a longer term loan yet we're in a free market and these loans are higher risk. 

2. As long as you keep paying on time then they'll usually roll it over. This is their business model, they'll usually want to keep the loan out with a good paying customer.