Las Vegas, NV · Member since 2013 · 4 posts · 0 votes
1. Ok as far as a LLC goes I live in Vegas can I get an LLC in another state and if so I can buy and sell in Vegas with that said LLC?
2. Here's My stats I make 34k per year I have 10k Liquid and a 760 credit score I can get a loan very easily but that's an owner occupied I am looking to buy, hold and rent out my problem i am running into is all the banks I called want 25 percent down? Any loan programs that will take it down to 10 percent down?
You don't need an LLC right now. You can't get a loan with the LLC at all. The LLC will need to show profits and have tax returns just like you do as an individual.
The only way to get 10% down is on a “second home loan” which you could Airbnb but you can not put a tenant in there.
You’ll need 5 grand give or take for closing costs so really you currently only have a 5k down payment. A 50k property is not going to get you the reviews you’d need to survive on Airbnb.
Here’s my advice. Find a duplex for 100k, live in half of it (which you must do for a year minimum) and reevaluate after that year is up.
You don't need an LLC right now. You can't get a loan with the LLC at all. The LLC will need to show profits and have tax returns just like you do as an individual.
The only way to get 10% down is on a “second home loan” which you could Airbnb but you can not put a tenant in there.
You’ll need 5 grand give or take for closing costs so really you currently only have a 5k down payment. A 50k property is not going to get you the reviews you’d need to survive on Airbnb.
Here’s my advice. Find a duplex for 100k, live in half of it (which you must do for a year minimum) and reevaluate after that year is up.
Correct me if I am wrong Lucas, but in the way she describes you can then claim the home as a "primary residence" and then qualify for a much lower down payment depending on the situation.
Hi Lucas thanks for reply but I know you can add closing costs in the mortgage so I ain't worried about that and I also know U can get a loan with an LLC but I am looking for that 10 percent down factor.
@EJ Hulse you can’t add closing costs to the mortgage you have to pay out of pocket. You can ask the seller to pay them for you. Depending on the market there will be a limit on how much a seller can contribute to closing costs on an investment loan. I’m in a few different markets. That number is up to 2.5% or 3% if the PP towards closing max. If you’re going to live in it you can ask them to pay the whole thing. In the current climate we’re not seeing them agree to this often.
And no, you can't get a conventional loan with a LLC unless that LLC has tax returns and DTI.
You can get a commercial loan in a new LLCs name but it would be backed by your personal.
Correct me if I am wrong Lucas, but in the way she describes you can then claim the home as a "primary residence" and then qualify for a much lower down payment depending on the situation.
I am correct in thinking that?
Yes this is why I suggested the duplex. Can do FHA for 3.5% down or conventional for 5% down but you have to have intentions to live in it for a minimum of a year. Still have to pay closing costs or ask seller to pay for you.
@Luke Carl and @EJ Hulse - max seller paid closing costs/prepaids/concessions are as follows - and not exactly dependent on a market (I'll explain this in a moment), they are dependent on loan type. Conventional lending i.e. Fannie/Freddie rules:Investment property = max 2% of sales price; Primary home with less than 10% down payment = max 3% of sales price; Primary/Second homes with 10%+ down payment = max 6% of sales price; Primary and Second homes with 25% plus down payment = 9% of sales price. However, I would strongly recommend you check your lender if your closing/prepaids are ever 6% or greater than the sales price. The only scenario I can think of where this may be the case would be for transactions under $100K.
The one piece of these maximum allowable seller contributions that is dependent on a specific market is when there are exceptions made for the part of the closing costs that are considered customarily paid by the seller for that area. For example, in Nashville, TN it is customary for the seller to pay Title fees so these would be allowed in addition to the max 2% for an investment property purchased in this area. It is not customary in Knoxville, TN for the seller to pay Title fees so in this scenario, no additional fees beyond the 2% would be allowed to be paid by the seller. Since you also mentioned possible purchasing as a primary, keep in mind that FHA max allowable seller paid contributions is 6% and VA is 4%. The seller can only contribute towards actual closing and prepaid costs, they can never contribute to the down payment.
In regards to closing in the name of an LLC - this is not allowed by any traditional residential loan programs. Fannie/Freddie do not allow this for Conventional lending, nor does HUD, VA, or USDA. It won't matter if the LLC has DTI or tax returns, they will not allow the mortgage to be backed by a company vs. a natural person. That being said, they have relaxed the rules about transferring Title to an LLC post-closing. Keep in mind, the note will never be allowed to be in the name of an LLC as a Conventional mortgage, but the property could be transferred to an LLC if it meets the posted requirements. If you do transfer Title to an LLC and want to refinance, Fannie/Freddie require that you transfer it back to your name before closing on the refi.
In terms of down payment on an investment SFH and MFH property, Fannie/Freddie requirements are 15% minimum down payment on a 1-unit investment property and 25% down payment on 2-4 unit multi-family. Fannie/Freddie do not allow for 2-4 unit properties to be purchased as a second home. Some lenders will require additional down payment beyond the Fannie/Freddie requirement as an overlay. My company does not require anything above and beyond the guideline amount, but I have seen others that do.
If you intend on occupying one of the units of an MFH as a primary residence, you may be able to go FHA with 3.5% down payment. Conventional does allow a primary 2-unit with 15% down and primary 3-4 unit properties require 25% down payment.
It's a lot of information and numbers and the rules/guidelines are constantly changing, so always check with a licensed Mortgage Loan Originator of course before you commit or sign any contracts!