Hollis, OK · Member since 2019 · 5 posts · 4 votes
My wife and I own 17 properties and we are wanting to refinance 11 of them but we are having a hard time finding a bank that will work with us. The problems we run into they won't loan to a LLC, Population density(because some are in a small town), Rent is not high enough. We are looking to do a 30 year 3-4% interest bundle, current payoff is $260,000, Estimated Value is $495,000. We would like to do a cash out refi. If anyone has any suggestions on a bank please let me know. I have already tried the banks suggested on BiggerPockets.com Thank you.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
4y
@Adam Bromlow most banks sell their loans to a secondary lender like Fannie May or Freddi Mac. These secondary lenders to not buy commercial loans (to an LLC)
You need to find a commercial lender. Your best bet for a bank is a small local bank. They are sometimes "Portfolio Lenders" this means they lend their own money and keep the loans in their portfolio. Most of these will have a call or rate adjustment after 5 years.
A better option is Debt Coverage Service Ratio (DSCR) loans. These are national lenders who loan to investors like us. Companies like Lima One, Lending One, Dominion Financial and many others do these loans. They generally do no need tax returns. Your credit only needs to be reasonable. Basically they want the rent to be able to cover the Mortgage payment by a certain ratio. Also the property need to appraise for enough. They lend 65 to 80% LTV.
Rates are going to be higher but it is possible to get 4.5% pretty easily and you can buy down to 3.5%
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
4y
@Adam Bromlow most banks sell their loans to a secondary lender like Fannie May or Freddi Mac. These secondary lenders to not buy commercial loans (to an LLC)
You need to find a commercial lender. Your best bet for a bank is a small local bank. They are sometimes "Portfolio Lenders" this means they lend their own money and keep the loans in their portfolio. Most of these will have a call or rate adjustment after 5 years.
A better option is Debt Coverage Service Ratio (DSCR) loans. These are national lenders who loan to investors like us. Companies like Lima One, Lending One, Dominion Financial and many others do these loans. They generally do no need tax returns. Your credit only needs to be reasonable. Basically they want the rent to be able to cover the Mortgage payment by a certain ratio. Also the property need to appraise for enough. They lend 65 to 80% LTV.
Rates are going to be higher but it is possible to get 4.5% pretty easily and you can buy down to 3.5%
Specialist · Philadelphia, PA · Member since 2010 · 298 posts · 118 votes
4y
@Adam Bromlow Adam, depending on how "rural" the area is where the properties reside and the "value" of each, typically a commercial style rental loan lender could help. Those lenders typically only lend to an entity (LLC), will have a minimum loan amount and minimum asset value. By itself any property would have to be worth at least $100K to have a min. loan amount of $75K. However if combined with others in a loan tape it might average out to meet their guidelines. An appraiser has one of three options to check for the location of the property: Urban, Suburban or Rural. Typically checking the Rural is a concern as most lenders do not want to lend on rural (farm style) properties as investment properties. However, if there is industry nearby (shopping centers, restaurants, businesses, etc.) then perhaps the Rural might still be OK as there is an argument that it was checked as Rural because it doesn't quite qualify for Suburban.
Here is what you will need to do. Have the leases on each ready, as that is what is used as the income source. The member(s) of the LLC are the additional guarantors. Probably will need at least a 660 mid-FICO (higher the better). Seek out a rental loan lender that lends on 1 to 4 unit properties in the market where the properties exist. The lender will gather the necessary docs from you and order appraisals. Typically tax returns are not needed, and if you are getting a cash-out loan(s), then bank statements typically aren't required either. It would be wise to supply the lender the addresses of the properties so that they can determine in advance if they fit the geographic makeup that they lend on or if they would be considered too rural for their loan product.