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!

@Clay Smith @Brie Schmidt Mr. Smith based on your last reply I would submit you have no clue as to what your doing and how banks work THERE IS NO SUCH THING AS QUICK DEED,, maybe a QUICKIE BUT not QUICK deed please refrain from Blowing smoke up this newbies you know what. From my experience and I am a stock owner of my community bank they just don't work this way.. your giving putred advice in my mind

@Jai Coward getting a 100% LTV loan isn't going to happen. Not with conventional, not commercial loans for an LLC, not hard money. Further, you won't get this even if the seller will carry a big second position loan. If you want 30 year fixed you will need to do it in your own name. If you want to finance with an LLC, plan on a personal guarantee and a shorter term (15, maybe 20 years) and ARMs or balloons. Avoiding the personal guarantee is possible (that's what a non-recourse loan is) but then you're looking at 35% or more down.

@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.

@Jai Coward - you cannot get a traditional 30 year residential loan to a LLC - every banker I have talked to will only do them to a person. Commercial financing will fund a LLC. Their terms are usually a 5 year loan on a 25 year amortization. The problem is without a track record they will want you to personally guarantee the loan. When I did my first commercial loan with my LLC they wanted my net worth to be greater than the loan they were giving me. IMO there is no point of getting hard money to fund a buy and hold if the exit strategy is to get a regular loan on it, why not just start with a regular loan? Just because you own the house does not mean the requirements change. If you can't qualify then you are stuck with a very expensive HML. Let's say you have the $55k and want to get a HML for the $120k. They charge 4 points upfront, so $4800 to just do the loan. Then if they do interest only your payment will be $1200 for 6 - 9 months. Then the $120k is due. Unless you are doing rehabs on these and can flip them or create enough equity in them to get all the money back it is a very risky idea

@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.

Who finances LLC's?!?!

Clay Smith

Real Estate Investor · Warner Robins, GA · Member since 2014 · 7 posts · 0 votes

12y

I've never in my LIFE heard anyone call it a "quicky" not sure you reside from.........I don't care if you are a dang owner of a bank you talk like a man that has not a clue in the world would YOU are talking about....Honestly you sounded sad. "I NEED XYZ QUICK CLAIMED OVER TO MY LLC PLEASE" REPLY FROM THEM: Will Get Right On It Mr. Smith. Sounds like you need to listen twice as hard as you speak, ya may learn something. And YES I'm 36 and my wife if 33 and we are as liquid as liquid gets . Have a great night!

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

12y

Mr. Smith I have no doubt your the top dog and I like all you dudes at 36 that know it all.

BUT FOR THE RECORD ITS QUIT CLAIM DEED.. Not a QUICK CLAIM DEED and a QUICKY is well you know what it is...your young..When you get on line and can't even call a deed by its correct name then it does create a question mark if you really know what your talking about.

And given my experience with banks and borrowing money which is longer than you have been alive and your post talk about something that is very much not the norm.. then one begs the question even Joe Gore questioned you

In GA there are deeds that transfer title.. and then there are security deeds and unlike most states there are two security deeds and one is called a deed to secure debt. I have done some bizz in GA bought 43 houses there and resold them to a hedge fund and have done many loans. Were I learned about Deed to secure debt.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

12y

@Christopher Winkler

Chris when I had my HML shop we had a full blown brick and mortar.. at the time I also owned the real estate company so we had 8k sq ft in a Class A building.. So my RE company and my HML were listed out in the hall and on the door. they did indeed come and walk through and check that we were brick and mortar.

Not sure how mom and pop landlords check credit but they do.

I have not run a Credit report since 2010.. so kind of out of the loop.. All the deals I do are JV's with trusted partners no need to run credit.

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Aaron Mazzrillo

Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes

12y

Originally posted by @Jay Hinrichs:

Mr. Smith I have no doubt your the top dog and I like all you dudes at 36 that know it all.

BUT FOR THE RECORD ITS QUIT CLAIM DEED.. Not a QUICK CLAIM DEED and a QUICKY is well you know what it is...your young..When you get on line and can't even call a deed by its correct name then it does create a question mark if you really know what your talking about.

Not sure why I'm tagged in this??.. I took and passed Principals of Real Estate at the local community college more than 10 years ago.

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Clay Smith

Real Estate Investor · Warner Robins, GA · Member since 2014 · 7 posts · 0 votes

12y

Gast typer. Dunandbrad

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Dean Letfus

Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes

12y

Quick Claimed deed, now THATS funny!!!

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Jon Holdman

Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes

12y

Originally posted by @Clay Smith:

Originally posted by @Account Closed:

@Westin Hudnall

You forgot to say that the lender can call the note due.

Joe Gore

@Joe Gore.....Only if you are dealing with a Federal Credit Union . If you're let's say with BB&T Absolutely not. I can't Stand dealing with ANY Federal credit Unions. Now they are trying to literally give us an 8 Million Dollar Line and we still say absolutely NOT!!!!!

Absolutely not true. Almost every loan given these days has a due on sale clause that give the lender the right (not obligation) to call the loan due if the ownership is changed. That include moving it to an LLC.

There is absolutely no such thing as a "quick claim deed". There are "quit claim deeds" but no such thing as a "quick claim deed."

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Patrick Lindsey

Real Estate Agent · Gibsonton, FL · Member since 2014 · 28 posts · 3 votes

12y

@Christopher Winkler I've used Experian Connect in the past a few times. You set up a free account, put in the Tenant's (or whoever) name and e-mail and Experian sends them a link to go to. They then pay $10 to have Experian send you access to their credit report. Its cheap and doesn't require any site inspections etc. Might be something for you to check out.

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Clay Smith

Real Estate Investor · Warner Robins, GA · Member since 2014 · 7 posts · 0 votes

12y

Originally posted by @Account Closed:

@Clay Smith

Will your name a bank that will loan to an LLC with no personal guarantee and the reason I ask the folks here on BP would love to deal with that bank?

@Joe Gore

Hi Joe. Sure, We Don't Deal With Them But BB&T Does For A Fact . They Are Wanting To Take Us Over. But I Can not Answer Why Some Get Done With No Guarantee And Some Do. We Aren't Anything Special But We Have Never Had To On Any Property. I know Some Do Not Agree With This But We Were Told Years Ago Under A different LLC. He Mentioned That It Was Smart To Get Verified With (Dun and Bradstreet) .. Because Your Business Credit Starts Getting Established Alot Quicker Than Most Thing....Ofcourse I'm Sure You know They Protect You. Have. A Great Day.

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Who finances LLC's?!?!

Who finances LLC's?!?!

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