Our client owns and manages four single-family rental homes in Michigan. He has been in business since 2011. Gross rentals for 2014 were $80,251. The company carries mortgages for two of the four properties and wanted to consolidate outstanding loans and leverage existing equity to purchase a fifth property. Their application was declined by a local bank stating complications collateralizing the loan through existing residential mortgage loans.
- Consolidate properties into one LLC.
- Consolidate outstanding mortgage loans into one commercial line of credit.
- Utilize line of credit to purchase a fifth property.
$175,000 for property purchase, improvements, and working capital.
- Preparation and submission of tax returns for 2014.
- Created Executive Summary with a detailed report on Use of Funds.
- Develop Projections with additional property income.
- Developed and implemented Debt Service Coverage (DSC) Ratio.
- Monitor monthly Profit & Loss Statements in accordance with DSC Ratio.
- Submission of loan package to local banks.
A commercial line of credit approved for $200,000 at 4.775% with an amortization period of 10 years.