I'm looking to branch out into buy and hold rental properties in my area. Found what looked like a decent deal, that is until my mortgage broker told me I can't get 30-yr residential mortgage because the property would be in an LLC. He said I can only get 20% down, 4.xx%, 30-yr residential mortgage if the property is my personal property. In today's litigious society, aint no way I'm putting a rental property in my name.
There are only two other options I've found, both were more expensive. The first was hard money, 30-yr amortization with 6.5% - 7.5% interest and 25% down. The other option was a local commercial lender with 4.75% rate, 20% down, but only amortized over 20 years and with a balloon at 5 years.
The monthly P&I for the two options was within $20 of each other. However, either option was significantly more than a 30-yr 4.75% mortgage. This killed the deal.
Where does one find a 4.xx% (or even a 5.00%) 30-yr mortgage for a rental property closed in an LLC? Does such a thing exist?
Other options and ideas?
I'm in an area where finding good deals on rental properties is very challenging which makes financing even more critical.
You don't. That 's part of the problem with the "must have the property in an LLC" idea. Some do transfer to an LLC after buying, but that opens up due on sale issues.
LLCs need to use commercial loans. You would be looking at something like a 20 year amortization with an adjustable rate, probably in the 5.5-6% range. If you want the preferential lending terms of a Fannie/Freddie loan then you have to own the property in your own name.
Not being able to get Fannie Mae rates is going to make finding a local rental property very challenging. Maybe that isn't a good strategy to use here now. I might have to stick with flipping.