Maybe this should go into the lending side, if so please move it. This is the form I follow most so posting it here.
I'm looking to get into STR's. Im as the point of lending. I know some of you have 1+ STR's. My question is reporting to personal credit. Do all of your STR's report to your personal credit?
Reason I ask, all the commercial building loans I hold up here in MN are in my LLC with a personal guarantee.The loan gets put into the LLC at the time of sale. Nothing gets posted to my personal credit. After speaking with a few of the lenders, all the loans get put into your personal name first. After that get moved into the LLC, but still report to my personal credit unless I go DSCR.
Reason I ask is, if you want to go buy something, refi your personal house, banks see all these loans your DTI will be horrible.
That is completely a function of whether or not your lender/servicer reports to the credit reporting agencies. Many DSCR lenders don't, some do...particularly if they are one of the larger conventional lending companies.
That is completely a function of whether or not your lender/servicer reports to the credit reporting agencies. Many DSCR lenders don't, some do...particularly if they are one of the larger conventional lending companies.
I agree depends on the lender and obviously the loan type. Some DSCR lenders do report to credit even if you've only given a limited guarantee. I would assume as long as your property cash flows then the DTI issue is not an issue.
The two banks I deal with up here do both, as far as reporting. If your taking the loan on a personal side, they report to your credit monthly, just like any other bank would. If its done on a commercial side, they don't, unless you default on the loan. I went into buying a STR planning on financing with 25% down and 20yr am. However, reading more into it I found people are using 20% down with a 30 year amortization. This was looking nice till I got to this point. I know there are plenty of people on here with multiple STR's. Can anyone chime in? Thanks
So, I can't say much because we are purchasing commercial properties, but we have done extensive research before we made a decision on what type of property we wanted to purchase.
First off, I would consider your goals and what your real estate purchases look like for the next several years. Can your DTI sustain another mortgage, or will another mortgage for a STR affect your future plans? If it's feasible to add another mortgage to your personal credit, your loan options are much better. But if you're like us, where another loan would complete kill the DTI and stop anything else from happening for many years to come, then using a commercial type of loan is the best option.
If you can find a loan officer that also helps with future planning, it would be beneficial! They can help walk through what would be the best route for your goals.
Thanks for the input. I was able to find a lender to do 20% on the commercial side with a rate comparable to if I was conventional. Even though its not a 30 year am, the numbers make sense and it wont effect any future plans.
Thanks for the input. I was able to find a lender to do 20% on the commercial side with a rate comparable to if I was conventional. Even though its not a 30 year am, the numbers make sense and it wont effect any future plans.
Was a personal guarantee required? Be careful if you're unsure or unaware of what they are. Wishing you well on your new journey!