First BRRRR Commercial loan

[Marcus Holloway]

I'm completed the rehab on my first planned brrrrr deal. It's a SF I own outright in a 50/50 LLC partnership.

The home was in total disrepair so we had to strip it down to the bones. 

In the current climate, we knew the refi would be difficult but not impossible. One issue that did "pop-up" was that since we purchased the home cash, within the LLC, we have to do a commercial loan vs a residential. I didn't know that.

I was expecting to go to a home lender and basically say "Hey, we have good credit. We rehabbed a home with personal credit; give us money." 

lol, that's clearly not the case. The application process for commercial business loans has been an experience. 

Any advice or insight on navigating commercial REFIs owned in LLCs?

Thanks

[Michael Gilman]

I suspect the issue is you have a multi member LLC versus single member because I have seen single member LLCs utilize conventional financing. As others have mentioned you may get better rates with conventional SFH financing but commercial loans are much quicker and straightforward process without nearly the brain damage that comes with the conventional financing process of verifying all income, expenses and loans with respect to yourself and your properties. The issue you may have on the commercial side is most bank lenders won't do a commercial loan for a single SFH. Typically you would need l aggregate a number of SFH (say 10) to bump up the loan amount and put it within range of the commercial programs. A hard money lender would be able to finance this scenario but cost of capital is more expensive.

If the conventional loan is what your after you should exhaust your list of local and regional banks and if nobody is financing then consider changing your ownership structure to get it financed via conventional.