What is the best way to grow after paying cash for MF in Atlanta

[Tareq Salaita]

I bought a MF unit in Atlanta 2 years ago and now I have found the value has gone up by about 30 percent. The property is paid for by cash (clear title under LLC name) and has been generating healthy cash flows. I need advise from experienced investors on my options to tap the equity to continue investing and growing. What is the difference between taking a mortgage out vs. an equity loan or line? What is the typical interest rate for commercial lending on this? What are the underwriting requirements? I have other SFH in Atlanta, can a commercial lender potentially bundle them all under a portfolio ? I have excellent credit but I work overseas (i have tax returns but no w2s)-- would that be an issue?

Thanks for any help here!

Tareq

[Azeez K.]

Hi @Tareq Salaita

Since your property is currently under an LLC here are some of the options

1. Refinance - You can refinance the property. However, traditional banks will not lend to an LLC. If you want to get a loan under an LLC you will need to go to banks and get a small business loan. The small business loans are offered by following banks in Atlanta such as BBT, Resurgent bank, Private Bank of Buckhead, Renasant bank. The challenge with getting a loan under an LLC is that the cost of finance is typically higher (6%) and they may or may not have a balloon payment at the end of 5 years. However, there are banks that do fix term as well. You as an owner of the LLC will need to provide a personal guarantee. The other challenge with refinancing under an LLC as opposed to getting under your name is the Home Equity Line. Typically, you are not qualified for a home equity line of credit for properties under an LLC. You may get a line of credit based on your credit but this is no where near what you could get under a HELOC. For example: You may get 10-15k as a line of credit as opposed to 80-100k with HELOC. 

2. Portfolio loans: You can get a portfolio loan under an LLC. The rates are higher still but as you increase your investor maturity profile and have multiple SFR's you most likely may end up getting a portfolio loan. 

Now to answer your questions:

1) Mortgage vs. HELOC

2) Commercial lending rates - ~5.75/6.75%

3) Yes

4) W2- from Banks POV is always favorable if no W2 they may give you a loan but the terms might be less favorable. Again depends from one bank to another.