Financing Property Owned by My LLC

[Katharine Chartrand]

I have properties that i am fixing up that have no liens on them, so I figured I would go to the bank and use them as collateral for $300K in loans for some renovation.

• Dunlap - an unimproved but habitable investment property that should appraise as is at $200K+.
• Grillo is a nice piece of land with an uninhabitable building. I am hoping to borrow against the value of the land, which is probably $120K

The trick of course, is that I only hold them 4-6 months, so high closing costs on the loan can make borrowing too expensive. I shopped around a lot for low closing costs.

The Bank of Oklahoma (which manifests in NM as the Bank of Albuquerque) was willing to lend me money using these houses as collateral, assuming they appraise as I predict. BofO offered me 7%, no closing costs and a 75% LTV.

Or that was the deal until the understood that the banks are owned my my LLC and not personally. At which point they found they need to treat this as a commercial loan and I find myself starting from zero in an entirely different department. I am not sure where things are headed.

I can deed the properties back to myself. The main issue becomes liability. Flipping is risky and I try to isolate my business activity and assets in an LLC.

I am interested in hearing from anyone who has been down this path and how it worked out.

>KNC<