Financing in an LLC

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clydesnodgrass

51 Posts

Posted - 01/20/2008 : 2:32:49 PM

If someone has an LLC that's been established for almost a year, is there a way for them to purchase, or in this case, refinance a home into the LLC's name. I don't mean change title so the LLC holds it, but actually finance it in the LLC's name. I have a condo that's at about 60% CLTC and an LLC that's been around for about 1.5 years. I figured what better way to try and start establishing some business credit then by doing it with a property that I already own that's worth quite a bit more then what I owe.

If anyone has any information - I'd appreciate it. I'll be glad to ellaborate more if anyone needs anything else.

Thanks,
Clyde

loanmasterone

1 Posts

Posted - 01/20/2008 : 2:51:34 PM

There are a few lenders that will allow this type transaction. Some will allow your LLC to do.

There are two ways this can normally happen

#1 Recourse You have to also sign as a personal gurantee of the loan or mortgage.

#2 Non-recourse the LLC stands alone and you are not required to sign to gurantee the mortgage.

What you have to do is find a lender that will allow you to do this.

The same principals apply as if an indivdual was borrowering the money, the LLC will be required to produce a credit check (Dun & Bradstreet), bank accounts, proof that the LLC can pay the mortgage by having and being able to prove income.

If the LLC can accomplice the above you should contact a mortgage broker to complete an application.

If you are unable to do the above you must do a little home work, like setting up bank accounts, getting a Dun & Bradstreet in the LLC's name and find away for the LLC to earn income with proof.

You should check with your tax consultant about a few of the items and perhaps a business consultant about setting up your Dun & Bradstreet if you have not set up one.

But the basic answer to your question is yes you may. You just have to find the correct lender that allow this type transaction.

CoolMtgGuy

1964 Posts

Posted - 01/20/2008 : 3:50:06 PM

loanmasterone - Can you name one or two lender who would finance a property with an LLC as the owner and the loan is not commercial? In 6 years, I have never found one so I am anxiously awaiting this piece of information from you.

Thanks.

mortgagemessiah

7853 Posts

Posted - 01/20/2008 : 5:24:56 PM

If it's one property, try Wachovia/World Savings. Unless something has changed in the past month, they will let people refinance SFRs and condos in an LLCs name and not charge hard money rates like Eastern.

clydesnodgrass

51 Posts

Posted - 01/20/2008 : 7:35:40 PM

Again - I'm not trying to close in the LLC's name... I don't know of any lenders in the 4+ years that I've been doing this lend money without it being a commercial loan.

Let me be a little more specific... I'm not remotely new to this game, so if someone has an "outside the box" idea, I'm all ears.

I have a FEIN, I applied for a DNB #, I have a business bank account that's been open for 2 years in the exact name of the company I own... I have a website, a directory listed telephone #, everything except somewhere to go to get the loan.

I'm in the middle (as of tonight) of putting my PFS statement together. I have enough liquid capital that I could pay off the mortgage on this condo today if need be (maybe that'll be enough - sort of like an assets in lieu of income scenario, but commercial). I know they like to see a lot of property, I own 5 units in and around South Tampa (one in Sarasota), some worth $600k+ a piece with notes under $350k. I made over 6 figures in 06' AND 07', but my AGI on both tax returns was and will be quite lower because of all the property I own, some vacant, some not. So after hearing that, if someone has a better idea, I'd like to hear it.

Not trying to sound like a braggadocio by any means, just trying to give the one or two people on here that might be able to help me out the full facts so I don't waste anyone's time.

Thanks

hectorm

251 Posts

Posted - 01/20/2008 : 8:10:32 PM

The answer is NO. Yes World will do it along with you and your LLC on the loan which only reduces their risk and defeats your purpose. You are on the hook. Lenders wisely do not do this because any tiny LLC could simply fold and BK and the only one taking a beating would be the lender. Even the 218 imploded lenders never offered this. This tells you how stupid it would be to give mortgage loans to an LLC.

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