Private Lending & Conventional Mortgage Advice

User Stats

40
Posts
28
Votes
Jimmy Lin
  • Philadelphia, PA
28
Votes |
40
Posts

Cash out refinance for LLC owned property

Jimmy Lin
  • Philadelphia, PA
Posted May 6 2019, 06:01

Hello BP. I would like some advice on securing loans in the name of a LLC. I currently hold a property in Philadelphia. Property is owned outright in a LLC, valued around 180k and occupied with a paying tenant. I am willing to use my personal name and income to "guarantee" the loan. So far, two lenders has asked me to transfer title to my personal name, which is not my end objective.

1) Since the property is in a LLC, do I have to go for commercial loan?

2) What are the typical interest rates? (750 credit score, Reasonable debt to income ratio).  I am getting offered around 6.25% for 30 yr fixed from local broker.   

3) Should I wait until I own more properties (free and clear) under the LLC and apply for a portfolio loan? How many units do you need for it to become a portfolio? Would the rates be more competitive then?

4) Should I purchase properties in my own name in order to secure conventional financing, and then transfer title to LLC via Trusts?

Any feedback or links to relevant discussions would be greatly appreciated! 

User Stats

40
Posts
28
Votes
Jimmy Lin
  • Philadelphia, PA
28
Votes |
40
Posts
Jimmy Lin
  • Philadelphia, PA
Replied Jul 7 2019, 12:16

@Alyn Shek

The lender charged me 0.5% points on both properties along with the typical transfer fees.

User Stats

24
Posts
4
Votes
Eric Yi
  • Seattle, WA
4
Votes |
24
Posts
Eric Yi
  • Seattle, WA
Replied Feb 1 2020, 14:25

@Jimmy Lin

Following this thread, great information.

That’s awesome that you found a local bank willing to make that deal. 

I’m trying to create a plan as well. Just to fully understand... Are you planning to refinance at the end of the 10 years with another lender? 

User Stats

40
Posts
28
Votes
Jimmy Lin
  • Philadelphia, PA
28
Votes |
40
Posts
Jimmy Lin
  • Philadelphia, PA
Replied Mar 29 2020, 11:30

@Eric Yi

That will have to be part of my exit strategy.  

My plan is to leverage all my properties to the neck for the first 5 years.  This way I can have maximum funding to scale and grow my portfolio. Since my original post 11 months ago, I am now at 13 units across 8 properties!  Starting at year 6, I will slow down on acquisition and start pouring available cash flow back into the 1st mortgage.  Snowball that into the 2nd and 3rd and so on. 

Hopefully, by year 10 I will have paid off a significant portion if not all of the mortgage principles for the increase in interest rates to be negligible.  If this is not the case by year 9, I will have to look into potential refi with a new loan or selling and exiting altogether is the market is up.

Update on my loans:  The lender I found in my previous post has recently stopped writing portfolio loans for LLCs.  I had to go to commercial for my 4th loan.  This did not affect me too much besides that the rate went up by 1-1.25% compared to my other loans.  The rate is still competitive since I already built a relationship with the bank.

User Stats

25
Posts
19
Votes
Eric L.
  • Rental Property Investor
  • Royersford, PA
19
Votes |
25
Posts
Eric L.
  • Rental Property Investor
  • Royersford, PA
Replied Mar 30 2020, 05:55

@Jimmy Lin do you recommend the portfolio lenders that you had used for the previous 3 properties?

User Stats

40
Posts
28
Votes
Jimmy Lin
  • Philadelphia, PA
28
Votes |
40
Posts
Jimmy Lin
  • Philadelphia, PA
Replied Mar 30 2020, 08:51

I would recommend them. I used them for my recent primary home purchase as well. They don't have all the bells and whistles the big banks have like mobile banking and their online banking registration is cumbersome. But they have competitive rates and are investor friendly.

@Eric L.

User Stats

40
Posts
28
Votes
Jimmy Lin
  • Philadelphia, PA
28
Votes |
40
Posts
Jimmy Lin
  • Philadelphia, PA
Replied Mar 30 2020, 08:53

For anyone that is looking for a lender.  S$T Bank is the lender I used.

User Stats

1
Posts
0
Votes
Theresa Whiting
  • Flipper/Rehabber
  • Philadelphia, PA
0
Votes |
1
Posts
Theresa Whiting
  • Flipper/Rehabber
  • Philadelphia, PA
Replied Dec 10 2020, 19:35

@Jimmy Lin

Hi Jimmy,

I was in the process of doing a cash out refinance for a rental in philly that's in my LLC...Bank just informed me that I would need to transfer out of my LLC to my personal name. If you don't mind sharing the name of the lender you met. I would like to reach out.

Thank you,

Theresa

User Stats

40
Posts
28
Votes
Jimmy Lin
  • Philadelphia, PA
28
Votes |
40
Posts
Jimmy Lin
  • Philadelphia, PA
Replied Dec 13 2020, 07:06

@Theresa Whiting

Katie Rittel was my banker. However, the bank went through a policy change at the end of 2019 and they now refer all LLCs to apply for commercial loan.

Commercial loans will have a higher interest rate as well as a shorter loan term.