Lending Suggestions for a New LLC

[Jason Deangelis]

Hi BP community. My partner & I have created an LLC as we have been searching for properties the last 6 months. We have found a 3 unit building in Illinois in which we want to make our offer. We are still trying to understand the best and legit approach to financing. Will we have no other choice to do a commercial loan, or, another option we have heard from a lender would be to obtain a conventional loan now and quit deed the claim to the LLC 6 months from now. Our concern is that we will encounter a "Due on Sale Clause" no matter what in this circumstance. If there is a direction we can be guided or any referrals to lenders to make this work we would greatly appreciate the assistance. Thanks in advance.

[Alex Bekeza]

@Jason Deangelis One way to avoid the due on sale clause issue is to just go with a commercial loan program which allows LLC vesting to begin with. Rates will of course be higher (5/6% range for 30 year fixed) but most will not require any LLC history, base the loan on DSCR/FICO rather than personal DTI, and have a very asset based approach to underwriting.

All the best,