Some friends and I are contemplating the purchase of a vacation property. We are mostly family (brothers, cousins) and a couple close friends. We are buying the property primarily for personal use, but might rent it on occasion.

Unfortunately, two of the friends are lawyers . They naturally lean toward forming an LLC to purchase the property (limits liability, easier to transfer shares, etc.). We recognize that, since the LLC is just a shell, we would have to give personal guarantees to the lender -- no problem.

In discussions with mortgage brokers and banks, I've learned that most won't lend to the LLC because they can't sell the paper to Fannie Mae, etc., Those that will consider such a loan are very vague about terms.

My question is: What kind of terms (relative to a standard 30 year, fixed rate loan) are we likely to get if we go the LLC route? Does the cost (in terms of loan terms) outweigh the benefits of an LLC?

Thanks,
John

Most lenders will consider it a commercial loan. As acommercial oan you will generally only get a 20 yr amortization and rates will be higher than a residential loan. Right now I am seeing rates of 6.75% - 7.5% depending on the loan amount and the strength of the deal.

Your last question is one only you can answer. Some people just sleep better at night knowing the property is in an LLC, especially if they are renting it out. Commercial tends to have very similar closing costs but you will generally have a higher payment. The flip side is that you build equity faster.

You may want to try World Savings. They are a national lender who I believe will lend to an LLC but with residential terms.

With TV Shows on Flipping Properties and the past two years of Interest Rates many groups or individuals are running to there local assessors office trying to find the best deal. With that in mind the banks are changing there rules as well since the LLC has become very popular. Here is some information of the LLC http://sbs.smallbusiness.yahoo.com/resourc...d=60information.
So yes you can obtain financining in the LLC for investment properties. Now you have to watch out for caps on how many you own and get a great tax person. Hope this helps.