First Cash Out Refi Deal

[Account Closed]

Hello BP, 

I'm currently working on my first cash-out-refi deal with a portfolio lender. The bank will give me 80% ARV with no seasoning period - just need a valid lease. My private lender is a close friend who is charging me interest only on the cash loan. Before I get started, I want to put this out there to BP to make sure I'm not missing anything major:

 1) Cash will be wired direct to Title company at close by my lender.  Is there anything I need to be aware of to prevent unforeseen tax implications down the road?

2) When the Cash-out-refi occurs and I pay my lender back with interest, is there anything I need to be aware of to prevent unforeseen tax implications? 

3) Any additional cash that is pulled out and kept within our LLC - any tax implications on this?

I just want to get a full understanding of whether there is something I'm missing by moving this money around.  

Any help is appreciated! 

Thanks, 

[Andrew Holmes]

@Account Closed

We have done about 150+ of these in the last 6 years. You are on the right track. 

Just make sure you give you Portfolio lender the right numbers of purchase, rehab, carrying costs etc. 

They say 80% I have only had 2 deals where they would go 80% and that was a very special exception. Typically is 75% of ARV that is the max. Also the ARV based on a flip is not the same as the appraisal that will come back on a lot of these refi. It's very common to get low appraisals for refi's. You can sell the same property all day long as a flip for $ 160,000 and you get a refi appraisal for $ 142,000.

So just plan very conservatively from the beginning. If you end up with more great.