I've done a traditional loan to my personal name and I've done a straight commercial/business loan (5year) to an LLC for a multi family but I've never pursued a fixed rate longer term note to an LLC.
I have a single family house under contract and would ideally like to find a fixed rate loan to and LLC (three partners, all with high credit). This might sound like a dumb/ newbie question but is this possible? I find info on the web a bit murky about this. I asked in the local forums because maybe someone has a personal referral. I posted a few months ago about a problem I had on another property and the NC forum was very helpful.
This property is in Durham if that is pertinent at all.
I don't see why this would be an issue, getting a loan to an LLC that has 3 members with good credit. Have you contacted the bank/financing source that provided your prior lending? That is the best place to start. BTW, you most likely won't get more than a 5 to 7 year loan (5-7 year 'call') with a 20 year amortization in today's market, given that rates are changing (increasing). Community banks local to Durham, that's where to look first. Then credit unions, then regional banks. The national banks (WF, etc.) won't know what to do with you. They sell originations to secondary markets (to FNMA, Freddie) and deal in-house only with 7 figure deals.
Hi Andrew! If you have not signed a purchase agreement or a clause that allows to pursue another loan without any penalty I would tend to the answer is "yes". If there is no financial penalty I would definitely shop around and, hopefully get seek out a better loan for you. If you have not signed anything you have many options to pursue. I do not have your goals but you could use an ARM to your favor depending on your goals. Having lower payments up front could help you make more if that fits your goals of trying to sell it the first couple of years. You could simply extend the time period to satisfy your needs. If you are planning on a long term investment I would recommend you shop around for a loan that better suits your needs. I do not know any obligations your Partners have above just money assistance. If they can or will assist you on the loan itwill make a difference. If you go to new lenders, it can help if you sound like you know about what you are doing. The more technical sounding might help you. You might get more negotiation outside of a regular Bank. They tend to know more about real estate than private lenders. They tend to look more at you at a Bank and look more at the project that Private Lender looks at and they may charge a little more than a Bank. Private Lenders tend to provide you with a shorter time but can give you more time to shop around for a long term loan. Private Lenders tend to be more negotiable. There might be a loan that might be made by the Owner. You might need to show them how that works on paper and that financing will likely make more money and spread out their income tax liability instead of claiming it all the next year. what you do not know until you ask questions to all possible lenders, especially all of the fees they charge. Best wishes!
Andrew, To my knowledge the only long term fixed rate commercial loan is a HUD 221 (d) (4). But it's for construction and minimum amount is $2million. Other than that most commercial loans are amortized over a 20 to 30 year term but have a balloon five to ten years into the amortization schedule. And typical commercial loans come with large pre-payment penalties if you pay off the loan before the balloon. Good luck!