New Construction Loan for Fourplex Development in San Bernardino

[Ian Huber]

My partner and I are purchasing vacant land in San Bernardino County with the intent to build a fourplex (or really two duplexes) one single lot. The lot previously had a house on it and would be infill in a predominately SFR neighborhood built in the 70s. Does anybody know a lender providing construction loans in this area? Questions we are looking into: If we purchase the property through an LLC (or Corp), are we going to get a less favorable construction loan rates? The concern is with that sort of institutional set up we'll be required to have a non-recourse loan and not able to take advantage of the current low mortgage rates when we refinance after construction is completed. Would a partnership be more favorable until after the initial refinance? Could the LLC then assume the mortgage?

[David Kelly]

@Ian Huber

Hi Ian,

To take advantage of the low rates you’ll want to avoid the commercial loan. Higher interest rates and the Maturity date will be less than 30 years in most cases. 

As far as qualified for the loan one or both of you can do that and if you would like to transfer it into an LLC after or at closing all we would need to do is a quit claim deed. If you want to refinance later on you would do another quit claim deed back into your personal name which can then be reversed again.

I do new construction loans in that area so feel free to reach out this week. I’m going to want to check the guidelines with Covid to see if anything‘s changed in the last month or so.