How to get a Real Estate Loan Using Your LLC (For Investors)!

this video we're going to talk about how to get a real estate loan using your llc stay tuned [Music] okay so you want to learn how to get a real estate loan and you want to use your llc so let's talk about that for a second are you looking to use that money on the acquisition the front end when you're buying the property or are you looking for that money on the cash out refi if you're doing the bur method in this video i'm going to talk about both techniques both processes and i'll even share with you what the qualifying factors are all right so first thing is when you're buying a property you're going to obviously need money a real estate investment loan or some type of line of credit in order to purchase the property that you're looking to buy maybe you're gonna do a fix and flip maybe you're gonna do a buy and hold doesn't really matter on the front end on the acquisition side you wanna decide how you're gonna get into the deal now the way i like to do it is i do a combo technique which is basically i use hard money alone for about 75 of the total project and then the other 25 total project i use a business line of credit or a business credit card now i have lots of videos uh right here on this channel that you could look at that talk all about how to get business credit cards how to get business lines of credit so if you're going to get a hard money loan on a property i would go to a local real estate networking group or a local real estate investment club or local facebook group where you know people in your state that are actively doing deals that you could talk to that you could ask who are they using for hard money the reason i mentioned that is when i first started you know my real estate career years ago i didn't really know who to use and there are actually some shysters out there that'll take advantage of newbie real estate investors so the best thing i could i could suggest for you is get a get a referral from someone that's actually close to the hard money lender okay once you do that you could find out what the hard money lender's requirements are and really there's not much you have to do with your llc at this point to actually qualify and get approved for the loan for the property because primarily it's the asset the property that you're getting involved in is there enough equity does it look like you'll be able to fix and flip it or fix and refinance it those are the things that the hard money lender is going to look at to help you qualify or not qualify for that investment loan okay so you could use a single use entity we have another video talks about that um to get into the property but basically it's it's an llc that's formed that is formed for the purpose of that one property that you're uh that you're purchasing okay now secondly you're gonna need some down payment money you know what about the other 25 that you're going to use for the down payment or for parts of the construction and what you could do is actually obtain either a business credit card or business line of credit to serve as the remainder money to get into that deal so if you're looking to do that you're going to want to build up your llc or s corporate c corp whatever your cpa suggests right you're going to build up your business credit profile in such a way that banks are going to lend to you we have lots and lots of videos i can share with you on that after you build up your business credit profile and all that you go out and get business lines of credit you get business credit cards you could pull cash off the business credit card if you wanted to there's a few different techniques that you could do that one of my clients actually uses a service called plastic it's a p-l-a-s-t-iq so it's plastic with q and he he has checks from plastic written to the title company and that's how he gets money off his business credit card to purchase real estate so i thought this was very smart i wanted to share that with you guys of course if you get a business line of credit it's a lot easier to pull cash from the line of credit because you could just transfer the money over you can pull it out as cash you can write a check for it or whatever so that's the front end of actually um buying a property and you need hard money or you need business lines or credit you need business credit cards what do we do on the back end right the only method that i'm familiar with when i'm buying real estate and getting long-term uh real estate investment loans in my llc is using the bur method so i you know you could actually just go to a bank you could put your traditional 25 down and qualify for the loan but then your 25 your down payment to get that two family or that three family property is tied up inside of the property now that that's a bad thing if you're making a good roi good return on your investment maybe that works for you but the method that i like to do and i have a whole training video on this is the bur method which essentially is to buy a property renovate it you know stabilize it get it rented out and then now that you've improved the value of that property you refinance it you pull your capital out so let's talk about that refinance you can't always pull all of your capital out but in the cases that you can it's a lot of fun because your your return on your investment is practically infinite if you have no out of pocket money and you're left with a income producing two or three family so how do we do the cash out refi on the cash out refi after you bought the property you fixed it up now it's time to refinance it you can either hit up a local community bank or credit union and i actually use the same banks to do the cash shell refinances that i share with you in other videos which is essentially to find local community banks local credit unions that are in the area that you're investing in okay and the reason for that is they do their own underwriting and they have a lot of programs that you're not going to find online you're not going to find a pamphlet or a brochure you're only going to find out about these programs those local banks offer by networking with local banks and talking with the vice president business funding talking with the loan officers and they'll share with you through the relationship that you build them some really cool programs and how to qualify for things in a lot of cases they'll actually advocate for your approval and you don't necessarily get that same type of treatment with a large big national lender that's why i really push for local community banks so when you're doing the cash out refi you can work with a local community bank there there are some technical formulas and things that they look at to make sure that they're willing to do your cash out refi okay to make sure that it's okay for you now to you stabilize the property and pull your money out one of the things that banks look at is it's called seasoning and essentially what seasoning is it's the amount of time that you've owned the property from when you bought it to where you're trying to do your refinance okay some banks don't even have seasoning requirements it's just they're a local community bank or credit union it's not part of their underwriting requirements some banks have very strict season requirements they might need to own the property for six months or a year or even longer so that's one of the things you want to look at the next item that you want to look at is called debt service coverage ratio dscr now i'm not going to explain exactly how to calculate debt service coverage ratio but essentially you need to make sure that the income from the property covers the debt the mortgage of the property okay so the income has to be higher than the mortgage than the debt of the property plus some breathing room okay so generally the banks like to use about 1.25 ratio in average there's got to be some 25 breathing room on the difference between the money coming in on the property the money going out now you could actually do cash out refinances which i have used as well in some cases with some of these online niche lenders or landlord lenders right companies like vizio for example they'll do your cash out refinance and then they don't require as much paperwork so when you do the local community bank the credit unions through the cash out refunds you're going to get better rates you have better terms there's banks that do you know 30 year fixed at a really great low rate but they need full documentation now interestingly enough though the full documentation you don't have to necessarily have a lot of income in order to qualify for the cash out refund because you can use a percentage of the future income that property is going to bring you as part of qualifying which is really cool so but let's just say for whatever reason you don't have anything you can't show tax returns you can't all right so then you could go after uh some of those local um sorry some of those national banks some of those niche lenders and it's amazing the programs that are available right now they weren't available five years ago they weren't available 10 years ago and now there's literally banks and lots and lots of money behind programs specifically for landlords doing the burn method doing this this cash-out refund method so they don't necessarily need tax returns and financials and their requirements are not restricted with credit but you will have you'll be paying a premium you'll be paying a little bit higher interest rate for one thing uh and secondly there's usually prepayment penalties so if you refinance in a couple years after getting that loan a lot of times there will be prepayment penalties so you just want to make sure you understand completely what you're getting into so that's my process of getting real estate investment loans using llc's if you like this video hit the thumbs up and if you want to look at how we are able to get a hundred grand in business lines of credit business credit cards in just 30 days without walking into a bank go to businesscreditworkshop.net download my free report go ahead and subscribe if you like these videos you want to see more so you'll be notified when the next video comes out [Music] you

Channel: Business Credit Workshop

Views: 29,911

Keywords: get real estate loan, get real estate loan using llc, business credit for real estate, How to get a Real Estate Loan Using Your LLC, hard money loans, brrrr method real estate, private lenders, cash out refi, loans for real estate investing, real estate loans, do banks lend to llc for real estate

Id: 1NFiU4apv1g

Length: 9min 30sec (570 seconds)

Published: Fri Jan 29 2021