Permanent Financing Issues for a Texas Series LLC

[Erik Johnson]

I recently started a Series LLC, and I am getting ready to do my first deal in the Central Texas area. I am being told that there are not lenders that will give a permanent fixed rate mortgage to an LLC.

Is this true?

Does anyone know of lenders that would do this for a Series LLC?

Thank you for any help y'all can provide.

[Will Fraser]

Welcome to the BP Forums, @Erik Johnson!  There is a lot of nuance to this question, so I feel compelled to clarify that I'm neither a loan officer nor an accountant.

That said . . . 

1. I don't think your "series" in the phrase "series LLC" is super relevant. That's the legal structure, but tax-wise it is probably still a pass-through entity. The bank will primarily be interested in having a guarantor, and that shouldn't be hindered by most Series LLC setups.

2. The loan will be a commercial loan (because it is to an entity and not a person), and it IS rare to find entity loans that are fixed rate over the whole, very long, life of the loan. It's not impossible, but it is uncommon. You'll expect to pay a premium for this "hedge", as it is usually not in the lender's best interest to fix the rate over the life of the loan, but at times it is very reasonable. For example, I was quoted a 6.5% interest rate for a 30-year fixed LLC loan a few months ago when the 3/1 loans amortized over 30 years were billing at 5.5-5.75%. So, for a percentage point or under it would have been fixed. If I had intended to hold that property for a very long time then it could have been a good play.

I hope this is helpful!