I am looking at financing a 4-plex, multifamily property in central Florida and was wondering what would be my best option for obtaining a loan. It would be an investment property (I wouldn't be living there), managed by a property mgmt service, owned as an LLC and costs $300-350,000. It would be cash flowing (presumably) with a cap rate between 5 and 10, depending on using the 50% expense calculation or their numbers, respectively.
I have excellent credit (>800) and money for a downpayment is not a problem; however this would be my first investment property purchase. My current outstanding primary home mortgage is less that 30% of current annual income. I would preferably like a 30-yr fixed loan (if possible) with the lowest rate possible. Anyone know where I should start (big banks, credit unions and/or commercial loans) and what type of financing I should expect? Thanks for helping me get started on the road!
Mostly traditional lenders won't lend on LLC but commercial lender can . If you are looking for 30 year fix regular conventional loan you can buy on your name. Start with your own bank where you do banking, you will be able to meet both LO's.
@Richard Davis If you looking for the best deal then closing on a conventional mortgage in just your name would be the best way to go. You can close in an LLC but the terms of the mortgage and closing costs will most likely be higher.
Conventional all the way. It will require you to purchase in your name, but it will give you the best rates and terms that you are looking for.
Commercial would be the way to go if you want to buy as LLC, but expect higher terms, fees and rates until you reach a loan amount over $1mm. Then commercial has it's benefits as it offers non-recourse loans, and more favorable terms.
Is there a way to take out a conventional loan, but still hold the property in an LLC for asset protection purposes?
@Richard Davis I'm an asset protection attorney. What I recommend is closing on the loan in your personal name, and then transferring the property to a land trust that is owned by the LLC. The transfer to the land trust avoids the due on sale clause and provides anonymity. Since the Land Trust is owned by the LLC the property is also protected.
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