Who finances LLC's?!?!

61 Replies

Hello All,

I am having a really foggy time understanding the process of getting loans for my newly established LLC. There is an offer I want to consider in Memphis, 4 rental properties, asking for $55k down, $120k financed with the following terms: 30 yr, 5yr balloon, 10% interest. So, where I really need understanding is, 1) wanting a loan for the $55k, who would finance that, and why? Hard money, commercial, private money, another lender I'm unaware exists?! 2) being a newly established llc, is that an issue for "whomever" will lend, to lend to us? 3) traditionally and strategically, how are you guys utilizing each of the aforementioned lenders (just so I can better understand)? 4) are those terms reasonable, expected? 5) should I seek to get the entire $175k financed by one lender, for better terms? Thanks so much in advance!

Two more questions, my LLC is not foreign qualified in TN, although if the deal is good enough, we won't have an issue filing the paperwork, but does this mean I will have to seek a loan from a TN institute? Also, even if I become FQ'd, will I need a TN address of some sort, or because I'm FQ'd, that takes care of any address issues? Thanks again!

you would need a private lending institution to make you a loan for your LLC as banks won't do it. We are workin g with a local establishment who is going to do an blanket loan for us with our LLC so it is possible but very very difficult to find.

Good luck

Lenders want a personal guarantee no matter if it is an LLC or, etc. because lenders have been burned by LLC fraud.

Joe Gore

Joe is incorrect Jai.   Hard money lenders will do non recourse all day long in Tennessee. It's no problem just expensive money.

No bank will take second position to give you your $55K down. Squeeze the seller for a lower down you can afford. My opinion is someone offering those terms (understand I have no idea of collateral value) is not real motivated.

@Dean Letfus  - non recourse?

@Mike M.  - right, so wouldn't one seek to get the full $175k from... -?

@Jai Coward  non recourse means you do not have to personally guarantee the loan. Non recourse sub prime mortgages is why you guys all got roasted alive a few years back. :-)

Mike has a point I forgot that you were looking for someone to take a second. That might be tricky. 

We invest in Memphis so may be able to help somehow, PM me if you want us to have a look at the deal with you.

@Dean Letfus

If you invest in Memphis, you should have your hands full of all the REOs that is for sale in Memphis.

Joe Gore

I have an LLC and have two properties financed by my local credit union. One is a 10/5 ARM amortized over 20 years and the other is a 15 year fixed. 4.5% interest rate but personally guaranteed, not non-recourse.

You'd go get the $175K minus 20% down.  It'll be a much more sensible deal than the seller's offer.


@Dean Letfus  - well, that's only because the seller is willing to finance $120k... But wouldn't getting a hard money loan for the $175k be better, through one source?

@Joe Gore

There are still plenty of REO's available here in Memphis but there is also a lot more competition to buy them. There are homes for sale all over but the ones in the hood most providers stay away from. Not every deal is good just bc of low prices.

I'm not the best one to advise you Jai as I am not a local so I do everything with hard money at 65% LTV. As an American you have more finance options available.

@Curt Davis

I agree with you but there are some in good areas but most buyers like playing games and saying they are a cash buyer, but they are way down on a daisy chain.

Joe Gore

@Joe Gore 

as you know I was a HML of some repute in the day.... And of course we asked for SS and Date of Birth. for two reasons one.. we wanted to run credit to make sure the client was not currently in bankruptcy or other entanglements or to see really how bad they were. Even with non recourse if we saw a pattern of default or a bunch of other credit issue it was a denial.. And date of birth we needed to make sure they were of legal age to contract.

California Credit Union will finance your California rental properties held by an LLC. Can't help you out with your out of state assets. Just one more reason to buy local.

Yes I am with you Jay life is good. Memphis is treating us very well. Wish I'd discovered America a long time ago. It's 100 degrees and 90% humidity here in Fiji today but I can;t complain :-)

@Dean Letfus  no problem, just wanted to get a feel for how you guys are doing your financing. Now when you say you're not local and therefore do hard money, why is that? Can you help me understand the purpose/strategy/reasons?

Account Closed thanks!

Hey @Jai what I meant is that I am a non resident alien. I lived in memphis for a year but live in Fiji and am originally from New Zealand. I have full time staff in Memphis.  We do many, many deals annually now but as we are not Americans we don't have any access to credit unions or local banks etc.

So we fund everything we do with OPM or hard money. If your deal is good enough we may be able to help you flip it or JV it or whatever if you can't find money through more conventional means.

In terms of general strategy we try to use seller finance as much as possible it is good for us as we can;t get to banks but we have the funds for deposits so never need to do no money down. 

@Jai Coward

Dean said he has a staff in Memphis you should get the address and stop by and see if he can help you and don't pay any upfront fees and you the borrower chooses the escrow and title and gets a lawyer to view all paperwork.

Joe Gore

@Jai Coward  when I lived in Memphis I had a continual stream of people trying to get me to help them get rich. Not saying you are like that but it seemed to happen all the time. 

My most common observation was that poor people trying to get rich out of real estate are usually destined to fail because they are poor for a reason. And that reason is gross mismanagement of their finances.  If you are not a good steward of your money real estate will not work for you. It takes discipline and hard work and sometimes finding a way when there is no way.  So first point if you are really bad with money go and get a financial education, learn how to balance your check book, start saving ten% of everything you earn even if you are on welfare.

THEN find someone you can partner with on a few deals who can supply the money or find a no money down deal to get started.  But don;t stretch yourself to breaking point if you aren;t in a solid head space and you have some discipline going. otherwise you will more than likely lose money and take others down with you.

@Dean Letfus  I definitely appreciate the wisdom, I assure you, however, this is no hobby, or side hustle for me... This is my business, I take it seriously, and I understand the importance of seeking advice from people who have walked where I'm walking through.., as far as the discipline and money management, has never been an issue for me.

This post has been removed.

Ok, will do! Much appreciated @Dean Letfus  

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