BRRRR Strategy with LLC?

[Chris Ayers]

I just created an LLC and will transfer my current properties into them on the next refinance. I bought these properties in my own name.

How would I do this in the future with new purchases via BRRRR? Would I buy them directly into the LLC or should I buy personal then transfer them later on the refinance? Does it matter?

Reason I ask if I have some personal credit cards with a 5% interest rate that I like to use for renovations. If I buy directly in to the LLC, then does this limit me to only using business credit cards?

[Matt Souza]

Hi @Chris Ayers,

Are you refinancing your current properties into a commercial loan? You will not be able to get a conventional mortgage if the title is held by an LLC.

For future BRRRRs, you really have two options:

1. Purchase the property in your name, renovate, and refinance into a conventional mortgage. You can then transfer the title from you to your LLC. The only issue with this is the bank can potentially call the loan due at this time (or any time thereafter), since there is a Due on Sale clause in the contact which prevents transferring the title without paying the loan balanace.
2. Purchase the property in the LLC and roll it into a single commercial loan or a portfolio loan with your other properties. This will have worse terms than the conventional mortgage, but the bank will not have the ability to call the loan due. However, it is nice to have just one loan and one payment on all your properties.

Hope this helps!