How do I get a Mtg loan under an LLC. The bank advised that they do not originate LLC loans. ?
A buddy and I recently opened an LLC. Our first order of business is to purchase a Distressed Property. I went to the bank for financing and they advised that they do not lend to LLCs. I see properties under company names all of the time so I know that it’s possible. Can someone please educate me on how it’s possible.
Thanks in advance.
Loaning to an LLC shouldnt be too big of a deal. What the bank is looking for is someone to guarantee the loan. Since your company is new, theres no credit history for it, or even financials to back up your application. Knowing this, you or your partner (or both) will need to be the guarantor of the mortgage loan. So basically, your credit will determine if you get the loan, but the LLC will get the deed to the property.
Also, as a side note, lately banks have been cautious of lending to investors without some serious deposit money. I recently had an investor give up on buying a property because he was required to put down 40% as a downpayment on the loan. With rules like these, its gonna be a tough time to leverage your purchasing power. I hope you have some cash upfront.
good luck.
Filed under: Distressed Properties
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Loaning to an LLC shouldnt be too big of a deal. What the bank is looking for is someone to guarantee the loan. Since your company is new, theres no credit history for it, or even financials to back up your application. Knowing this, you or your partner (or both) will need to be the guarantor of the mortgage loan. So basically, your credit will determine if you get the loan, but the LLC will get the deed to the property.
Also, as a side note, lately banks have been cautious of lending to investors without some serious deposit money. I recently had an investor give up on buying a property because he was required to put down 40% as a downpayment on the loan. With rules like these, its gonna be a tough time to leverage your purchasing power. I hope you have some cash upfront.
good luck.
References :
Most banks are going to want you and/or your buddy to personally guarantee the loan for them to lend to the LLC. If it has no history, no assets, and no cash flow, it looks like a bad risk.
Alternatively, a private money lender will loan to an LLC if the property has a good loan-to-value ratio. Try googling "hard money lender" or "private lender" to see what you can find. Their rates probably will be higher than a traditional bank, but at least you wont’ have to put your own finances and assets at risk. Then, if you are renting it out and can show a lease and cash flow, a bank MAY refinance for you if there is enough equity.
Private money is probably your best bet.
Good luck!
References :