I'm hoping some of you real estate gurus can point me in the right direction. I have a place in River Ridge that I have purchased and fixed up with cash and an unsecured line of credit. For what we are trying to do with it, I think a 3 year balloon is probably the best route. The home is owned in an LLC.

There are a number of lenders out there that are willing to do a commercial loan, but interest rates are highly variable from one institution to the next. Also, most places will only go 70-80% on loan to cost rather than loan to value ratio. Based on what the home will appraise for, we could cash out nearly all of our investment if they only looked at loan to value.

Who have you guys been using, and what kinds of deals have you been getting?

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Posted by baldona

Florida

Member since Feb 2016

20447 posts

Posted on 5/15/17 at 5:59 pm to hombreman9

For what little it is worth, I ran into the same issues this past winter. You pretty much have to get a commercial loan that's prime plus 2-3% for a rental property and those loans are on your cost not the appraised value. I don't understand this, but I couldn't figure out a way to get my money back. I had some other options, so I stopped looking.

Once you have a portfolio and business built up, you are able to get portfolio and business loans without individual appraisals. That's the way the bigger guys do it in my understanding.

But I had bought a rental property for $72k cash and put $8k in repairs, it then appraised for $110k but I think I could of sold it for $120k. I used $50k heloc and the rest cash, not realizing that I should of used a full heloc as I was only able to loan back out what my original loan was for.

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Posted by hawkeye007

Member since Feb 2010

5851 posts

Posted on 5/16/17 at 9:34 am to hombreman9

first i am a mortgage lender so i am not speaking out of the side of my mouth when i state this. The best way to do this is to finance the house in your name. so the loan is a residential mortgage. once the loan is closed donate your interest to the LLC. So the LLC owns the house and you are not liable but you as an owner of the LLC used your personal credit to secure financing. I have groups of investors that i work with and this is how they finance homes with residential terms instead of commercial terms.

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Posted by cmlsu

Baton Rouge, LA

Member since Aug 2011

659 posts

Posted on 5/16/17 at 9:42 am to hawkeye007

How often do lenders enforce the due on sale clause when this happens...any general rule? I also think you can only get up to four personal loans on homes that can be sold to Fannie and Freddie correct?

This post was edited on 5/16/17 at 9:44 am

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Posted by Fat Bastard