bank financing for first deal - SFR buy and hold

Real Estate Broker · Magnolia, TX · Member since 2016 · 59 posts · 10 votes

Looking for suggestions on the best banks, locally, for a loan on my first investment property. Looking to pick up a SFR or a Multi. Depends on the deal. Just looking to secure financing, so that I can move when I find a deal.

Justin

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Doug McLeodPro Member

Investor · Cypress, TX · Member since 2014 · 496 posts · 205 votes

If you are buying/financing in your own name, there are many mortgage brokers and banks who can help you.

If you are buying in an LLC, there are still many places to get qualified for funding, but it is a smaller set of lenders and you'll get less favorable terms.

Happy to offer suggestions if you connect/PM me.

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Doug McLeodPro Member
Investor · Cypress, TX · Member since 2014 · 496 posts · 205 votes
9y
If you are buying/financing in your own name, there are many mortgage brokers and banks who can help you.
If you are buying in an LLC, there are still many places to get qualified for funding, but it is a smaller set of lenders and you'll get less favorable terms.
Happy to offer suggestions if you connect/PM me.
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Roshan Koppuzhayil
Sugar Land, TX · Member since 2017 · 49 posts · 10 votes
9y
@Doug McLeod Can you provide some details about the differences in lending for buying under your name vs an LLC?
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Sylvester Maith
Real Estate Professional · Hampton, VA · Member since 2014 · 4 posts · 1 vote
9y
Here is some information about our loan programs that my company have available, we mainly deal with buy and hold deals. Please feel free to contact me.
Our programs could work for a fix and flip strategy only if they refinanced a property they intend to hold for at least 3-5 years in regards to the prepayment penalties on our programs. Then they could cash out and use the money for a fix and flip.
Our programs also work great for rehab to rent strategies as we can refinance the borrower out of a high interest balloon payment loan for a better rate and term to hold the property long term. The best part is we only need 30 days of seasoning on title, so we can process a loan for them while they are completing the rehab. We only have to wait to close until rehab is complete or 30 days has passed on title.
Our strengths are for buy and hold, 30 year term, aggressive rates, speed of closing(20 business days), only 30 days seasoning on title, no sourcing or seasoning on funds for closing, 75% LTV on purchase or refi, close under personal or business for title, and blanket loans for 3-9 properties per loan (helps clean up borrowers bureau as we do not report to credit/ raises LTV, consolidates payments).
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Kevin Coggins
Spring, TX · Member since 2016 · 243 posts · 203 votes
9y
@Roshan Koppuzhayil Do you just mean the numbers aspect? I've recently been looking and still need to find another quote or two to get a better idea of what's out there. Here's what I found so far:
Loan to individual: 30 yr fixed at 5%, 20% down
Loan to LLC: 15 yr adjustable (rate adjusted every 5 yrs) at 6.15%, 20% down
If you already have business experience and can provide numbers for the previous three years, it'd probably significantly easier to find a loan for your LLC and more favorable terms.
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Roshan Koppuzhayil
Sugar Land, TX · Member since 2017 · 49 posts · 10 votes
9y
@Kevin Coggins That helps a lot! I'm trying to figure out whether to start under my name or an LLC. I definitely want to do 1031 exchanges after 5 years or so on each property and move up until I can buy apartments. Any idea if a 1031 is allowed if selling a property that is under your own name and buying a property under an LLC?
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Kevin Coggins
Spring, TX · Member since 2016 · 243 posts · 203 votes
9y
@Roshan Koppuzhayil I have no clue on 1031 Exchanges...I'm in the similar boat to you on deciding on LLC vs individual (leaning towards LLC).
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
9y
@Roshan Koppuzhayil and @Kevin Coggins. When doing a 1031 exchange the tax payer for the old property must be the same as the tax payer for the new property. So you kind of have to choose a lane. It's perfectly fine to own and 1031 property in your name, taking advantage of easier financing and purchase property in your name. It's also fine to own property in an LLC for it's advantages and when you 1031 the new property must be purchased by that LLC.
The exception to this is if your LLC is a single entity LLC that does not file it's own tax return. The IRS disregards that entity for tax purposes since all activity of the LLC is on your personal return. In that event then you may sell as the LLC and buy as yourself or vice versa.
One potential solution if you own in your own name is to complete your exchange by purchasing in your name and then contributing the property to an entity. However your lender will have to be on board with this to avoid any loan issues.
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Roshan Koppuzhayil
Sugar Land, TX · Member since 2017 · 49 posts · 10 votes
9y
Thanks @Dave Foster! That clarifies it a lot. I think I'll just start out with an LLC, both for liability purposes and to make the 1031 process less problematic.
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