Difficulty to get loan for new LLC?

Question

Situation:

How to acquire a loan with a new LLC unable to approve income?

Scenario:

1. Own property and needs full renovations

2. Class C/D area so looking to rent out after Reno done

3. House debt: 7500.00

4. ARV: 75000

5. Want to pull 60000 and use 40000,including paying off lenders,  for reno and apply remainder towards next property.

After BRRR, how am able to get financing for another property?

Alton, IL

Greg Kasmer · Answer

Micah - I think the loan size mentioned by EJ is real... I would call 10-15 local banks and credit unions and ask to speak to their business banker about business loans in LLCs. They should be able to let you know about their general terms as well as loan size. I have two locally that I can call for that loan amount, but I had to sift through a lot of "Nos" before I found one. Good Luck!

Chris Seveney · Answer

I think people fail to realize when getting a loan you need income and collateral. Many start an LLC for real estate and think they can get a line of credit or business loan - but you do not have an operating business, you are investing. If you have a hot dog stand and sell hot dogs and can prove revenue then a loan could be possible as you produce something.

As an investor, you need a home that can produce something (income) to get a loan against that. If you have ARV of 75k pulling 60k is 80% LTV which is probably high on a property wiht that low a value.

AJ Exner · Answer

Hey Micah,

There are certainly lenders that can help with something like that, but I think you are going to run into some issues with your values.

Setting up a refinance with an escrow would be fine, but if your ARV is only 75k, then most groups would do 70% of ARV, which after your 7500 payoff and closing costs, puts you with an escrow around that 40k mark.

It would be tight for a lot of groups, plus refinancing at 75k could be a challenge as well.

I think I know of a few that could help, would be happy to connect and see how we could help

Good luck!

Difficulty to get loan for new LLC?

Most Popular Reply