Recommendation for mortgage lender who will lend directly to LLC
Member since 2022 · 2 posts · 8 votes
Recommendation for mortgage lender who will lend directly to LLC
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votesQuote from @Rob Wallace:
I'm looking to purchase a rental property in Cincinnati. My partner and I are unmarried and have set up an LLC with each of us as 50% members. We would like to purchase the property through the LLC with financing directly to the LLC.
We spoke with a credit union who said that would be possible; however the loan was not approved due to both of us being NY residents. The LLC is an Ohio entity with an agent located in Ohio, and we also have local property management.
Is there any way we can amend our operating agreement/LLC structure in order to anonymize our addresses? Potentially a PO Box in OH for our addresses?
If anyone could recommend a lender who would be willing to loan directly to an LLC, that would be greatly appreciated!
You seem to be a perfect candidate for "DSCR Loans" - which are the typical option here for real estate investors looking to use an LLC vs. individual or some of the requirements you mentioned. LLC-friendly is one of the main advantages of DSCR
Sharing a few articles on the ins and outs of this option!
DSCR Loans: What Are They And How To Get The Best Terms
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DSCR Loans: How To Use Pro Strategies To Save More And Make More
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Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?
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12 Frequently Asked Questions (And Answers) About DSCR Loans
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8 More Commonly Asked Questions and Answers to DSCR Loans
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Harpoon Capital514 Reviews
11 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Rob Wallace
Credit unions typically do not lend to LLC's
I will focus on another topic - I strongly recommend your operating agreement have terms preset if things personally go bad and one has to buy the other out. If not, in many instances it does not end well: while hope everything goes good forever - always good to have a what if plan just in case
7e investments53 Reviews - Lender · Boston, MA · Member since 2023 · 415 posts · 95 votes2y
Hi Rob,
Most DSCR lenders are okay with out-of-state investors, so you wouldn't need to amend the Operating Agreement at all. Plus, DSCR lenders will underwrite based on the assets' ability to cash flow rather than your personal financial situation.
Typical Terms:30-Year Fixed Rate
7.25 - 8.25%
- Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes2y
I'll echo the above comment - most DSCR products should work here if the financials of the deal are good. For the anonymity question, I'd recommend speaking with an attorney. The rules vary wildly across states. Some people recommend filing in WY, other recommend land trusts, etc.
- 2yMelvin ListBusiness MemberLender · Tampa, FL · Member since 2016 · 1k+ posts · 381 votes
Agreed most DSCR lenders will lend in an LLC
- Lender · Member since 2022 · 217 posts · 148 votes2y
Welcome to Cincy...DSCR lenders will lend to an LLC all day long, in fact many if not most require it as part of this business purpose loan...
- Financial Advisor · Port St. Lucie · Member since 2020 · 44 posts · 15 votes2y
Hello Rob,
This is an example of the type of investor financing that we have had success in closing for our clients in the past. Typically if local management is in place, it is no problem. Please feel free to contact me for additional options and information.
- 2yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Rob Wallace:
I'm looking to purchase a rental property in Cincinnati. My partner and I are unmarried and have set up an LLC with each of us as 50% members. We would like to purchase the property through the LLC with financing directly to the LLC.
We spoke with a credit union who said that would be possible; however the loan was not approved due to both of us being NY residents. The LLC is an Ohio entity with an agent located in Ohio, and we also have local property management.Is there any way we can amend our operating agreement/LLC structure in order to anonymize our addresses? Potentially a PO Box in OH for our addresses?
If anyone could recommend a lender who would be willing to loan directly to an LLC, that would be greatly appreciated!
You seem to be a perfect candidate for "DSCR Loans" - which are the typical option here for real estate investors looking to use an LLC vs. individual or some of the requirements you mentioned. LLC-friendly is one of the main advantages of DSCR
Sharing a few articles on the ins and outs of this option!
DSCR Loans: What Are They And How To Get The Best Terms
https://www.biggerpockets.com/...
DSCR Loans: How To Use Pro Strategies To Save More And Make Morehttps://www.biggerpockets.com/...
Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?https://www.biggerpockets.com/...
12 Frequently Asked Questions (And Answers) About DSCR Loanshttps://www.biggerpockets.com/...
8 More Commonly Asked Questions and Answers to DSCR Loans
https://www.biggerpockets.com/blog/eight-questions-and-answe...
What Documents Do You Need for a DSCR Loan?
https://www.biggerpockets.com/blog/what-documents-do-you-nee...Harpoon Capital514 Reviews - Lender · Member since 2021 · 495 posts · 130 votes2yA DSCR loan is a perfect fit, plenty of lenders like myself able to help.
Quote from @Rob Wallace:
I'm looking to purchase a rental property in Cincinnati. My partner and I are unmarried and have set up an LLC with each of us as 50% members. We would like to purchase the property through the LLC with financing directly to the LLC.
We spoke with a credit union who said that would be possible; however the loan was not approved due to both of us being NY residents. The LLC is an Ohio entity with an agent located in Ohio, and we also have local property management.Is there any way we can amend our operating agreement/LLC structure in order to anonymize our addresses? Potentially a PO Box in OH for our addresses?
If anyone could recommend a lender who would be willing to loan directly to an LLC, that would be greatly appreciated!
For your anonymity, consider consulting with your attorney. - Lender · Chicago, IL · Member since 2021 · 424 posts · 145 votes2y
Quote from @Andrew Zamboroski:
A DSCR loan is a perfect fit, plenty of lenders like myself able to help.Quote from @Rob Wallace:
I'm looking to purchase a rental property in Cincinnati. My partner and I are unmarried and have set up an LLC with each of us as 50% members. We would like to purchase the property through the LLC with financing directly to the LLC.
We spoke with a credit union who said that would be possible; however the loan was not approved due to both of us being NY residents. The LLC is an Ohio entity with an agent located in Ohio, and we also have local property management.Is there any way we can amend our operating agreement/LLC structure in order to anonymize our addresses? Potentially a PO Box in OH for our addresses?
If anyone could recommend a lender who would be willing to loan directly to an LLC, that would be greatly appreciated!
For your anonymity, consider consulting with your attorney.Agree with what everyone has stated. Recently quoted a DSCR loan at 7.125 and 1 pt with a 700 FICO. The market wants the loans.
- 2yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 497 votes
There are DSCR lenders that will lend to an LLC where the LLC members live out of state.
More on DSCR loans in case helpful: DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.Happy to connect to discuss further.
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