I have 2M worth of properties, all fully paid for, in an irrevocable trust. I'm trying to secure $300K of financing, just 15% LTV, but all the lenders, including hard money lenders, aren't comfortable or don't understand lending to a trust. The trust collects $150K/yr in rental income, so between the established rental income and asset value it should seem like an easy, low-risk loan for a lender to service.
Does anyone have experience with this? Do I have any options?
How do I secure financing for an irrevocable trust?
byu/Harry_Coolahan inrealestateinvesting
Posted by Harry_Coolahan
5 Comments
Been through something similar when my family was dealing with trust stuff for our rental properties back in Europe. Most traditional lenders just don’t want to deal with the paperwork headache of trusts, even when the numbers look solid like yours. You might have better luck with smaller regional banks or credit unions – they’re usually more flexible and willing to actually look at your situation instead of just following corporate policies.
Is the Trust going to guarantee the loan? As an underwriter, I’d make this a stipulation to ensure I am secured by hard collateral
What banks have you talked to? Any bank that anyone has ever heard of will be familiar with lending to trusts. Who is trustee?
It’s probably because they’re in an irrevocable trust rather than a revocable trust. Irrevocable trusts protect you from creditors and it’s not easy for them to take back the asset if you default.
That’s going to be tough – most will only lend to irrevocable. Loan will need to be in the trusts name and have all applicable parties sign off. Also need to make sure the trust doesn’t prohibit loans