BRRRR: Do you use refinance into an LLC or Conventional?

[Pavel K.]

Hi all -- I am looking for some feedback on Conventional financing vs Commercial financing.

If you purchase a property in cash, renovate + do a cash out refinance -- do you typically do the refinance into an LLC/commercial 25 year amortized loan or place the property on a conventional loan and change the name from sole proprietor to an LLC on the title to limit your liability?

Getting a conventional loan will offer the best rates and you can do a 30 year loan, but there are concerns of the lender calling a 'due on sale' clause.

How are you guys typically handling BRRRR strategies when it comes to doing a cash out refinance?

Do you cash out refinance with a lender straight to LLC or Conventional when it comes to aquiring the loan after the property is rehabbed?

[Nicholas Covington]

@Pavel K. As a Mortgage broker, that is something I personally do not talk about. My professional opinion is don't do it, it's not worth the risk. If you are so pressed about getting the benefits of a LLC, look into just getting an umbrella policy on your rentals instead. Google LLC vs Umbrella policy and see if that covers your personal preferences. If the loan is called then the loan is called. You sign papers stating that vesting will stay in the name you originally signed for.