Commercial Loan - Need Signed Tenant Agreement

[David Riedman]

I'm interested in purchasing a residential rental property with my LLC. This will be the first property the business owns. I have excess earnings after expenses and my accountant advised to spend this cash on a property, vehicle, or 401k to avoid paying taxes on it. I'm in good shape on retirement and have newer cars. I found a couple ready to rent single family homes that work for my target price, available cash for down payment, and projected monthly rent.

A local credit union approved me for a 75% commercial loan at 4.15%. Everything seems standard with the loan except they require a signed lease agreement from a tenant at closing. How do I get a tenant to sign a lease on a property that I don't even own yet? Have you seen this before and how did you handle it?

Thanks for the help.

-David

[Cason Acor]

Are you saying they want a new lease signed by closing? Or are they assuming that the home is already occupied and want a copy of the current lease?

Requiring a copy of the lease is standard practice for lending on investment properties, assuming someone is already renting it. 

I would clarify with the lender and make sure they know you’re buying a vacant home.