So I've seen a few threads on this, but I know the market is always changing, so I just want to make sure I haven't missed anything. We have a property under contract (2/1 SFR & a duplex w/ a 2/1 & a 2/2). These are two separate parcels next to each other.
Since we are taking title in the LLC, we are talking to commercial/business lenders. So far, we've found most willing to do 20 yr amortization w/ 5/5 ARM starting at 4.5% and no cap on the re-pricing after 5 yrs. This did seem relatively standard with most local banks we were actually able to speak with.
Should I keep shopping, or is this pretty standard and unlikely to find anything better? Thanks in advance. The BP community is always so helpful!
The terms of many lenders are not that far off... most of the time. Sound like you've talked to a few and have a multiple choice question with multiple right answers.
I would like to know if its possible to take the property down by yourself and then just transfer the deed into the L.L.C.? Seems like you could get a better package that way if its possible or even legal. I am curious about this same problem because it would cut down on your cash flow considerably it would seem. I will be following this thread and heed the advice of more experienced investors. Good luck and happy hunting.
So my best option seemed to be the 20-year amortization with repricing every 5 years. That is with a local bank, and I'm moving forward with that. If I come across something better, I may refi down the road, but for now, I'm happy with this. Just wanted to let everyone know where it ended up, in case someone else is looking later. (I hate reading threads that never show the end result) Thanks for the responses!
I guess I lucked out, in that I found a bank to do a straight 20 year fixed, commercial loan with 25% down. Is that unusual, or fairly common?
I just received a proposal from a local lender for a blanket mortgage for 4 of our properties for 3 yr fixed at 3.7% or 5 yr fixed 4.25% then each would reset every 3 or 5 years respectively over the 20 yr. term. The LTV would be roughly 75%.
Pretty standard in my operating area. Every once in a while I will find a 25 year amortization but it will be a 2 or 3 year fixed.
@Greg Martin Below are some options you may want to evaluate. BP Disclosure: BP admins below are options I have used in the past I am not trying to promote or benefit from any options listed below:
Option 1: Small Business Loan Program
Bank that does it: BB&T/and some smaller local banks
How does it work?
Basically, speak to a Small Business Loan officer. Tell them about your business plan i.e. Buy and hold real estate. They can provide loans under an LLC for a fixed term i.e. 15 years no balloon
Pros - commercial loan does not reflect bad on your credit since its commercial loan, fixed rate no balloon
Con- higher rates 5, No HELOC you have to get HLoan, You can only be eligible for that 250-300k ish whatever the max amount is..
Suitable for smaller acquisitions under LLC - 250K-300k loan amounts.
Option 2: MF Acquisition Program
Bank that does it: Wells Fargo
How does it work?
Same way as above
Suitable for mid size MF 5-30 units
Option 3: Smaller Banks as mentioned above that do a Balloon
PS Note their programs may have changed etc but might still be good to do some additional research.
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