Borrow from the In-Laws?

1 Reply

I'm looking to make a move into commercial multifamily in the $1M range but need the 25% down. My In-Laws have volunteered to provide the initial down payment provided they would be able to pull out if needed. My goal would be give them the option after the first 5 year mortgage term is up. Until then I would like to pay them dividends if we set it up as an LLC. In other words they would be equity investors and the money they 'lend' would not be a loan. Would a commercial lender agree to this and is an LLC the best way to go?

If they're going to be equity investor's, you're probably making a security. But commercial lenders are fine with these types of arrangements, although they usually want all equity investors to sign on the loan at the beginning.