Refinancing an LLC in New York

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Refinancing an LLC in New York

James Luctamar
Investor · Westchester, NY · Member since 2021 · 91 posts · 83 votes

Good evening everyone,

I have a property that I am closing on this month in New York with the strategy of Buy Renovate Refinance Airbnb/ STR.

I realized that it is a little tricky to refinance an LLC that's Single family as you will be given commercial rates. For those who have been in a similar position, what would you say is the best way to go about getting a 30 year amortized fixed loan on an LLC and why? Thanks!

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Christopher Nehren
Realtor · Salt Lake City, UT · Member since 2021 · 14 posts · 10 votes
4y

@James Luctamar "direct from their balance sheets" means that they hold the loan on their books and don't sell it on the secondary market. That means they get to control the underwriting process and don't have to abide by the typical lending criteria. This is what makes it possible for them to potentially lend to an LLC where bigger, national banks cannot.

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  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    4y

    Call local/small banks and credit unions that lend direct from their balance sheets. You can also reach out to hard money lenders for some "permanent" capital solutions which will be cheaper than typical hard money rates but more expensive than bank financing. 

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  • James Luctamar
    OP
    Investor · Westchester, NY · Member since 2021 · 91 posts · 83 votes
    4y

    @Alexander Szikla
    Call local/small banks and credit unions that lend direct from their balance sheets.

    What do you mean by lend direct from their balance sheets? Just trying to see how I would structure that question.


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  • Sam AlberryPro Member
    Watertown, NY · Member since 2014 · 32 posts · 3 votes
    4y

    James I am in the same boat as you so I will be interested to see all the answers. I have a sf rental that I own and will be looking to refinance with a long term loan.

    But what Alexander said was pretty much what I have heard . By lend direct from their balance sheet I believe means they use their own money and will not be outsourcing the loan in the future.

    Thanks for asking the question I will be following 

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  • Christopher Nehren
    Realtor · Salt Lake City, UT · Member since 2021 · 14 posts · 10 votes
    4y

    @James Luctamar "direct from their balance sheets" means that they hold the loan on their books and don't sell it on the secondary market. That means they get to control the underwriting process and don't have to abide by the typical lending criteria. This is what makes it possible for them to potentially lend to an LLC where bigger, national banks cannot.

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  • Stephen KeigheryBusiness Member
    Rental Property Investor · New Orleans, LA · Member since 2018 · 717 posts · 555 votes
    4y

    @James Luctamar I do 30 year fixed rate cash out Refi's in my LLC all the time (on single family and small multifamily). They aren't that hard to find, I did some research and found a bunch. I ended up using First Equity Funding out of New Jersey.

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  • James Luctamar
    OP
    Investor · Westchester, NY · Member since 2021 · 91 posts · 83 votes
    4y

    @Stephen Keighery What interest rates are you getting? Are they from 4-5% or similar rates as a conventional in the 2-3% range?

    @Christopher Nehren Thank you so much for the insight and clarity.

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  • Kyle McCann
    Lender · Collingswood, NJ · Member since 2016 · 36 posts · 13 votes
    4y

    4-5% is typical for the "hard money" space right now.  Those loans are based of of Debt Service Coverage Ratios and less so on borrower credentials.  I've several of my properties locked up in 30 year amortized loans of that variety right now.  They make a lot of sense for me because my debt to income ratios don't qualify for conforming loans. 

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  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    4y

    What sort of renovation is needed on the property?

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  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    4y

    Sure, @Christopher Nehren gave a great answer but I'll add a little more. Many banks offer financing through government programs (i.e. Fannie Mae, Freddie Mac, USDA, etc.). 

    All these programs have "guidelines" and, often, cash out refis from LLCs don't "fit".

    Larger banks often are too bureaucratic - so  you want to find a small bank that is willing to "back you" 

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