Rental Property Investor · New York City, NY · Member since 2014 · 13 posts · 3 votes
Hi BP,
I have been working for the past 2 months now to find a commercial lender to refinance rental properties that I own outright in an LLC and have been unsuccessful. I recently put an application in with a mortgage broker and they said they are confident they can arrange finaincing but are going to charge 4 points worth of fees, which I find to be extremely high. All of the local community banks in the area are no longer lending on single family rental properties owned by LLC's as they are overexposed to them. Are there any national lenders or mortgage brokers you would recommend?
Some specifics about my situation:
-Properties appraise between 55K and 90K each for a total portfolio value around 300K
-They are all rented for around $800 a month each
-There is a good deal of forced equity in each property as I rehabbed all of them
-LLC has been in operation for a year and is wholly owned by me
Investor · Newtown Square, PA · Member since 2015 · 132 posts · 149 votes
9y
Angad,
I can tell you from experience that you will find someone that lends in your situation. I own many properties all under LLC's and do blanket loans all the time. Forget about paying 4 pts. Get in your car and go to every small community bank as well as every credit union in your area and ask to speak to someone in commercial lending. These are the people that will do these type of loans. Don't stop at 5 or 10. It took me about 15 stops before I hit jackpot. I now have an amazing lender that does everyone of my deals.
Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
9y
Only commercial lenders can finance under LLC and they will charge upfront points from you. Your loan amount is small that could be reason of higher points. Banks don't lend on LLC.
Investor · Bensalem, PA · Member since 2011 · 146 posts · 93 votes
9y
You are getting charged 4 points because banks don't lend on LLC's, only commercial lenders do, and they have high fee's. You are comparing apples to oranges. Consider it the cost of doing business and be thankful you found a lender that will do the refi for you.
Rental Property Investor · Olympia, WA · Member since 2014 · 777 posts · 744 votes
9y
@Angad G. 4 points is for hard money! why do you want commercial financing on SFR? As you have seen it can be more expensive as well as shorter terms (requiring expensive refinancing in 5, 7, or 10 years). Unless you have too many loans the better money is on standard financing (less in loan costs, 30 year am, 80% ltv vs. 70%) I get you want them in an LLC, but there are other (less expensive) ways to protect yourself.
Investor · Newtown Square, PA · Member since 2015 · 132 posts · 149 votes
9y
Angad,
I can tell you from experience that you will find someone that lends in your situation. I own many properties all under LLC's and do blanket loans all the time. Forget about paying 4 pts. Get in your car and go to every small community bank as well as every credit union in your area and ask to speak to someone in commercial lending. These are the people that will do these type of loans. Don't stop at 5 or 10. It took me about 15 stops before I hit jackpot. I now have an amazing lender that does everyone of my deals.
Murrells Inlet, SC · Member since 2017 · 3 posts · 1 vote
9y
I see no reason I wouldn't lend on that assuming a reasonable LTV. I work for a community bank in SC and do those kind of loans all the time with less than a point in origination fee usually.
Rental Property Investor · New York City, NY · Member since 2014 · 13 posts · 3 votes
9y
Thanks all for your feedback!
@Curtis Bidwell I went the LLC route on the insistence of my CPA because of liability reasons. The game plan we made was to buy about 5 properties in an LLC and then create a new entity for each group of 5 houses so I never have more than $500K at risk.
@Alan G. Hi Alan! I approached about 20 banks and got very close to getting financing from a few local banks. On 1 of them, the loan officer took my app in and then just went MIA, not responding to my calls or emails. The other rejected my application as the LLC had been in operation for less than a year and I am first time landlord. The 3rd bank is backed up so they wont even look at my app until mid next month.