loan as a private company

[Dana Regan]

I have been a landlord for a few years, but as a side job. As such, getting refinance loans was no problem because of my full time employment.  I am now a consultant, and because I don't have a full year with proven income, my lenders are not able/ willing to work with me.  How have others overcome this?

Thank you!

[Gerald Demers]

Hello @Dana Regan.  We only partner with private lenders so no banks are involved.  

That being said, with our SFH properties owned in an LLC, individually, we cannot get conventional financing for them regardless of our income elsewhere. But as a group, we can get a commercial loan for all of them at once.

There are several lenders that will look at this and they really look at income of the property compared to debt service.  While our credit score does come into play, our income in other areas does not.  And they want to see a loan of at least 250K, 500K minimum preferred.  They only lend on performing properties - ie, already renovated and rented out.  

We just started looking at this.   Our idea is to free up about 400K in private money for purchases they won't finance like non-performing notes and other distressed property.  Once we have another group of properties, we will package that up in another loan and free up the underlying private funds.  

The lower lending rates (5% instead of 8%) will also allow us to create an additional $787 in cash flow.   We will use this additional cash for our note investing and not to accelerate paying mortgages down because we can generate significantly greater returns than 5%. 

You know costs to refinancing a single property can be a few thousand dollars. Well, those costs are multiplied when doing it for multiple properties all at once so that can be cost prohibitive. For us, the additional cash flow takes care of that. If it's 20K to refinance everything, 787*12/20K is a 47.22% ROI. I would do that all day long even if we have to borrow the refinance costs at 12%.

Gerald Demers