How hard is it to get financing for a partnership, 3-4 investors, buying investment properties?

Asked by Nicholas Polito, Atlantic City, NJ Wed Nov 17, 2010

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tina lobiondo’s answer
tina lobiondo, Agent, VENTNOR, NJ
Thu Nov 18, 2010
Hi Nicholas,
Have your investors spoken with any of the local banks? We recommend several including Sun Bank and Ocean City Home Bank. If your clients are looking for a terrific investment property in Hammonton, I have one located at 220 Vine Street, right in the heart of the business district. It has tremendous potential as a restaurant, convenience store, retail boutique or professional office!
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Merydith End…, Agent, Millestone, NJ
Wed Nov 17, 2010
Based on the question, it seems that these investors are new to the real estate business. I recommend they find out more about the entities to purchase properties in to protect themselves. This is the perfect storm to purchase real estate but be a savvy investor.
I recommend going to this website which gave some solid information. It is called : Investing in Real Estate? Consider an LLC via @AddThis.
Once you create your entity, contact a mortgage broker who can answer your financing questions.
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Don Tepper, Agent, Burke, VA
Wed Nov 17, 2010
The investors will have to guarantee the financing personally.

A partnership is far weaker than even an LLC. I'm unaware of anyone willing to lend to a partnership. As for an LLC, it's possible to borrow in the name of the LLC if the partners agree to personally guarantee the loan. But lenders are very wary of lending money to LLCs unless they have a long history and are well established.

Besides, the investors shouldn't be going into it in a partnership structure in any case. Check with a lawyer for more information on that.

One other possibility--if the investors have money in IRAs--is to transfer some or all of their funds to self-directed IRAs. Then they can use that money for real estate investments. But it has to be done right.

Hope that helps.
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