BRRRR!! Can property in LLC get 30 year residential re-fi

[Garrett M.]

BRRRR! I recently bought my first property in the name of my new LLC. I'm planning to use the Buy, Renovate, Rent, Refinance, Repeat method outlined by Brandon Turner. I was under the impression I could get 30 year residential refi terms once the property is fixed-up. But an investor friend just told me I'll likely need to get commercial financing because I bought it in an LLC. Has anyone been through something like this situation? The commercial refinancing I am not familiar with so I need to do my research. But from what my investor friend said, it sounds like interest rate of the commercial refi resets every five years. I want to lock in the low rates for the long term. Was it a mistake to buy through the LLC if my goal was to use this strategy? Thanks for any wisdom you can share!

[Andrew Holmes]

Hey Garrett: You will not be able to do a traditional residential 30 year loan in an LLC. There is another option but it is expensive in terms of rates.

Here are the 3 options.

1. 30 year loan - Quit claim the property from your LLC to your own name. Please check with the loan officer that you are going to use before you quit claim or do anything. Almost any lender that does residential loans should be able to help you. Then once your loan is done you can move it back to your LLC.

2. Commercial Type 1: You can get loans from a portfolio lender or commercial loan for a residential property. The typical terms that you will get are as follows.

20 - 25 Year amortization

4.75 - 5.5% rate

5-7 Year balloon

3. Commercial Type 2: This type of a lender is a bit harder to find but they do exist. They will give you a 30 year fixed loan for a rate around 7.125 with your LLC owning the property. If the property has less than 6 months seasoning they will give you 60 - 70% of appraised value. If it is more than 6 months seasoning you will get up to 80% of appraised value.

Hope that helps

Andrew.