Mortgage with Purchase under LLC

My partners and I are looking to purchase a 3-4 family townhouse with under an LLC. The reason why we need to do it through an LLC is that some of my partners are not US nationals, therefore they don’t have a credit history here. (They have good and well documented income from EU institutions.) Are there any lenders that provide financing for purchasing under LLCs? What are the conditions? (LTV, DCSR limits, loan size, reno loans?) Thank you!

beneec

in Mortgage 10 years and 5 months ago

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Augustiner | 10 years and 5 months ago

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The banks here go by guidelines that do not leave room for anything even slightly out of the ordinary. As the banking system in EU and US is totally seperated (Try opening a EU account as US Citizen or vice versa: no chance. Or: Sending $20 will cost you $40 in fees). Banks that are present on both continents are not interconnected, which is a big obstacle. Income statements or tax returns from your partners will not benefit in any way if your partners don´t have US credit history. They can be millionaires but they won´t even get a phone contract here. Save yourself time, have your partners take out loans in their originating countries and buy cash. I don´t know if that´s recommendable but maybe you could be the personal guarantor for the loan and they could be shareholders in the LLC with some sort of legal construct that takes the weight of your shoulders. I´m not a lawyer though.

bk1lnite | 10 years and 5 months ago

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Agree with resident2 that you’d have to do a commercial loan. Banks doing conventional (fannie / freddie backed) financing with 30 year term won’t lend to an entity – only to individuals. With a commercial loan you’ll likely end up with a shorter term typically 5 years renewable for 5 more with a 30 year amortization, 70% LTV, 1.5 DSCR. This is not ideal because conventional financing works for individuals for up to 4 family houses (whereas you’d have to do commercial financing for more units) and you’d do well to lock in today’s low rates long term. An unofficial way around it is to purchase and borrow as individual(s) (if you can qualify for the loan) and then deed it to the LLC. Technically the loan would have a “due on sale” clause but the bank may not bother as long as payments are on time.

resident2 | 10 years and 5 months ago

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An LLC with some partners (members) with well documented income from EU does not impress conventional financing here. Banks look to assets and income in the US only! No matter which way you look at it, it is going to be a commercial loan situation. Conventional financing is for legal resident owner occupants only. If it looks like a business partnership it does not qualify for conventional financing. Just about all smaller commercial mortgages want some one/people personally liable for it, no matter what entity (Corporation, Partnership, LLC etc.) you hold title in. Income & assets in Foreign countries are not acceptable. Depending on how much equity you have in the deal will make a big difference as to financing options, but there will not be many options. If I was you I would have your foreign partners put up all the equity; you will be the one on the line to personally guarantee the financing. It also helps if you have a record of managing buildings/tenants etc.