Not-so successful isn't strictly true... more a learning curve!! I've been involved in Real estate as a broker for 23 years, and I recently started investing for myself (What took me so long is a whole other topic....) Now, because of experience, I thought I knew what i was doing, but I'm in the process of slipping on a banana skin. I closed my second deal, a BRRRR property. The numbers are great, and I purchased with private money, structured on a one-off balloon payment to reduce the carrying costs while i Rehabbed. I've now owned the place for 6 months, and am trying to re-fi, and here is the banana skin..... I closed on the property in my S-corp.... and I had no idea that owning in this entity would give me such a headache on the re-fi!!!!!
I know have a $30,000 balloon payment due, and I'm not sure how to pay that.... I'm going to try and re-negotiate with my lender to an amortized schedule, but I think this mistake is going to sour this relationship. What a disaster..... Oh well, we live and learn. I just really hope they don't try to take the property, because the deal was a diamond... 25k purchase, 20k rehab, ARV 75k and $900 in rent....
If anyone has suggestion on portfolio lenders who might do a cash out re-fi on this I'd love to hear. I'd also welcome any ideas on how to take this to my private money guy without getting my legs broken, or loosing the property..... <Face palms>
Quit claim it into your own name and refi?
Owning in entity you’ll need a “commercial” loan, as opposed to conventional/Fannie loan....20ish year amortization, 5-7 year balloon.
@David Sisson , yes, an option, but then it has to season for six months, because it's an Scorp, not an LLC. Have to figure out making it worth my private money guy's time to wait, and hope he doesn't have other plans for the money...
@Wayne Brooks , yes, this is what we are trying to explore, maybe portfolio lenders too, or other private money on a longer term..
Buy it from yourself w/a standard loan? IE: the S-corp sells to you as an individual, at closing you pay off your investor. I'm no expert here, just spitballing.
So what happened with this situation? If it was me, I probably would have just sold the property, made everyone whole and started over.
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