Investor · Warrington, PA · Member since 2013 · 8 posts · 0 votes
Hi all - I am relatively new to the investing world and was hoping to gain some insight into financing for deals. I opened up an LLC with my business partner, and the more I am researching and asking around, the more I am finding that it's more difficult to obtain financing through an LLC, and the rates and terms are higher and more strict. I don't want to purchase my first deal in my name, or pay the transfer taxes to transfer to an LLC. Hoping you all have some ideas and advice on how to obtain financing for my first deal. Specs are approx 300k, 10% down, goal is to flip. Thanks so much!
Real Estate Lender · Columbus, OH · Member since 2013 · 23 posts · 0 votes
13y
Hey Krista,
Where are you hearing that you will be charged more for getting financing in an LLC name vs your personal name? I find it interesting that is the case and am interested to learn more.
Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
13y
When you purchase a property with an LLC you are getting a commercial loan. Typically, commercial loans require 20% (or more) down on a property, which differs from residential loans in which many people can put as little as 3.5% down on a purchase. Another difference is the term, which in most cases are shorter than standard residential purchase loans. From my experience, 5 year commercial loans are the most common although I am sure it varies by lender and location. One of the big differences in the two is the secondary market. Fannie and Freddie purchase residential loans, whereas most commercial loans are in house from the lenders and not sold, which is why you see the higher rates.
Investor · New York City, NY · Member since 2013 · 1k+ posts · 269 votes
13y
Krista,
Actually we only lend to LLC's as a private lender. Our focus is on short term lending for flippers/rehabbers so it does not work for buy/hold/rent as rates are lower with banks over the long haul. The loan type to a LLC is commercial and banks have seperate departments for that.
Real Estate Lender · Miami, FL · Member since 2013 · 243 posts · 24 votes
13y
@Anthony Dadlani is correct- HML's usually only lend to a business entity- I know we only do so. If you are looking for conventional financing for investment property from a conventional lender- that is very difficult to find in the current lending marketplace. Therefore, you may be stuck w/ HML and then you are ok w/ LLC.