refinancing/purchasing Conventional vs. Commercial

[Adrian Akerman]

Hello everyone, new to the BiggerPockets community here and I'm at the point where I want to leverage equity assets to complete more rehabs on existing properties, and fund more purchases, and am learning more about the BRRRR, having completed B,R, & R so far on several properties thus far.

I've been talking to commercial and conventional lenders and my questions are as follows: Is borrowing in the LLC better, and does this really gain a better write-off potential? I am gathering that borrowing in my LLC using a commercial style 30yr for purchases and refinancing is better as it will enable me to write off the mortgage payments as well as prevent my DTI from rising too high, is it worth the added points and interest in most cases? Also, have you been able to achieve a blanket loan secured against multiple properties to avoid multiple closings?

Credit is great, but self-employed net income was low prior to 2019. 

[Stephanie P.]

Originally posted by @Adrian Akerman:

Hello everyone, new to the BiggerPockets community here and I'm at the point where I want to leverage equity assets to complete more rehabs on existing properties, and fund more purchases, and am learning more about the BRRRR, having completed B,R, & R so far on several properties thus far.

I've been talking to commercial and conventional lenders and my questions are as follows: Is borrowing in the LLC better, and does this really gain a better write-off potential? I am gathering that borrowing in my LLC using a commercial style 30yr for purchases and refinancing is better as it will enable me to write off the mortgage payments as well as prevent my DTI from rising too high, is it worth the added points and interest in most cases? Also, have you been able to achieve a blanket loan secured against multiple properties to avoid multiple closings?

Credit is great, but self-employed net income was low prior to 2019. 

Hey Adrian

Lot to unpack here, but I"ll try.  

First, welcome to BP.  You'll love it here.

Second: The LLC may be better or not. Lots of threads on here about it and it really depends on you, your assets and how comfortable you are with your assets being in your name. I have suggested in the past that a good lawyer will be able to pierce just about any corporate veil and a good umbrella liability policy may be a great alternative. There's also a way to put your assets into a trust that is as safe or safer than an LLC. Lots of posts about the trusts and some good people to talk to also here on BP.

Third: I would recommend a portfolio/commercial loan after you've exhausted your conventional financing options. They're a little more expensive, but you won't have to worry about DTI because for the most part, they require no income verification.

Fourth:  Don't do a blanket.  They're not that much cheaper, you still have to pay for an appraisal on all of your properties and if you ever want or need to sell one, the penalty and hassle isn't worth it.

Hope that helps

Stephanie