Tapping into equity on my property that is under an LLC

[Vinny Muli]

When I first started investing in real estate, I always read that you should have your properties in LLCs to protect your personal assets. Now that I have some equity built up and want to pull some using a HELOC to purchase my next property, no one will work with me because the property is under an LLC. How are other investors leveraging their equity for new deals? Do you keep your properties under your own name? Trying to create a plan to get into another property without using my own cash or refinancing. Thank you!

[Jaycee Greene]

Hey @Vinny Muli! Welcome to the BP Community and most folks I know that are in your same situation with properties in 1 or more LLCs end up refinancing those properties into DSCR loans (instead of HELOCs) to extract the cash they need for their next acquisitions.

[Vinny Muli]

Thank you @Jaycee Greene ! I appreciate the help. I will definitely look into this! I house hacked both the properties I have and thought I should put them into LLCs for liability purposes, did not realize that I would have trouble getting a HELOC in the future. In retrospect I probably should have kept my original one in my name. Lesson learned!!

@Jaycee Greene

[Samuel Eddinger]

@Vinny Muli - it is VERY hard but not impossible to get an equity line of credit on a non owner occupied property.  I'm doing one right now.  You can get something called a "Guidance" Line of Credit.  I've found the easiest solution is to have a really strong banking relationship and then they will be able to provide non-standard offerings.  The problem is that they do not usually give this to new people and/or people that do not have big amounts deposited into their accounts.

I'm also CT based.  DM me if you are interested in talking about this more.

[Gino Barbaro]

@Vinny Muli

If you have equity built up, can you do a cash out refi? You may have to put the deed into your own name. I would talk to the bank first. You are still personally guaranteeing the loan.

And you did the right thing by putting the assets into an entity, especially if there is equity. Find a mortgage broker who will help you with this

Gino

[Mark Munson]

Hi @Vinny Muli

As others have mentioned, you can do a cash-out refinance using a DSCR loans and get up to 75-80% Loan to Value. You'll be paying off your current debt as well, so just make sure the change in the interest rate is worth it. It is much harder to find a 2nd lien lender on an investment property and, even if you do, they are going to have maximums on the collective loan to value between both liens. I would use the Lender tab here on BP to call around and find a lender or broker you may want to work with and compare loan structures and pricing.

[Robert Rixer]

LLC's are still the way to go but yes you can't tap into owner occupied mortgage tools such as HELOC's or high leverage. Unpopular opinion since I know you're trying to buy the next property, but keeping your equity in a deal is gold. Payments stay lower, cashflow better and it'll boost your balance sheet not to mention lower risk when things go awry.

[Vinny Muli]

@Robert Rixer so you would suggest saving up enough cash to buy as an investor for my next property? First two properties I house hacked, allowing me to put down very little. I know I will need to save up a 20% down payment as an investor which could take a while. Everything I have read always says to leverage a previous property so I never have to use my own cash. Thanks in advance I appreciate the insight. 

[Jaycee Greene]

Hey @Vinny Muli. Have you refinanced the first 2 properties with a DSCR loan yet?

[Kaden Nguyen]

All my investment properties are in LLC for liability purposes like you've mentioned. I've done multiple cash-out refi with DSCR loans. DSCR loans will not be advantageous when compared to conventional loans. But if you bought your properties correctly, it will work out. "You make your money when you buy not when you sale" is what most would call this. Hope this helps.

[Rich Davis]

They will lend the money if you personally guarantee the loan. I know, sorta defeats the purpose of an LLC from a financial perspective, but gets the job done.

[Greg Kasmer]

Quote fro.@Vinny Muli:

When I first started investing in real estate, I always read that you should have your properties in LLCs to protect your personal assets. Now that I have some equity built up and want to pull some using a HELOC to purchase my next property, no one will work with me because the property is under an LLC. How are other investors leveraging their equity for new deals? Do you keep your properties under your own name? Trying to create a plan to get into another property without using my own cash or refinancing. Thank you!

@Vinny Muli - I'm working on using a HELOC to pull money out of a few SFR I have in an LLC name. Still working through the process, but looks like it may work. Reach out to me if you'd like to discuss!

[Vinny Muli]

@Jaycee Greene I have not. When you do a DSCR loan, is it like a refinance where your interest rate will change? or is it similar to a HELOC where I would be getting a line of credit? I am a teacher and high school football coach so things have been so crazy, now that football is over I am going to look into this more. I haven't spoken with anyone yet, looking to see what companies will do the DSCR loan.

[Jaycee Greene]

Hey @Vinny Muli. Yes, a DSCR loan is generally a refinance of a property once all of the rehab has been completed and you've started renting out the units. DSCR's are "term" loans, which means there's some amount of principal being paid back with all of your loan payments, vs. lines of credit where you're generally only paying interest. DSCR loans are generally done in the name of the LLC (or whatever non-personal name entitle owns the property), so I'm not sure why you're being told they can't lend to the LLC, unless you're trying to get a traditional, consumer mortgage.

[Vinny Muli]

@Jaycee Greene I appreciate the info and clearing that up for me! I was told that I couldn't get a HELOC on my properties due to them being in LLCs. I probably wouldn't want to use a DSCR loan then, because my interest rate on the multi-family is much lower than the current rates.

I guess that is where my dilemma is. I want to pull equity through a loan like a HELOC because I don't want to refinance. I want to use the equity to purchase another investment property but due to my properties being in LLCs, it has been much more difficult than I thought it would be. Everything I had read and heard was that I should protect myself by having them in LLCs but I didn't realize I couldn't get a HELOC after (which many investors say in their books/podcasts that they use to leverage into more properties)

[Jaycee Greene]

Quote from @Vinny Muli:

@Jaycee Greene I appreciate the info and clearing that up for me! I was told that I couldn't get a HELOC on my properties due to them being in LLCs. I probably wouldn't want to use a DSCR loan then, because my interest rate on the multi-family is much lower than the current rates.

I guess that is where my dilemma is. I want to pull equity through a loan like a HELOC because I don't want to refinance. I want to use the equity to purchase another investment property but due to my properties being in LLCs, it has been much more difficult than I thought it would be. Everything I had read and heard was that I should protect myself by having them in LLCs but I didn't realize I couldn't get a HELOC after (which many investors say in their books/podcasts that they use to leverage into more properties)

 I'll send you a DM

[Gregory Carter]

I have this same issue. My property is in a LLC with no mortgage. I paid cash for the property two years ago and want to get some of the equity to purchase another property. My townhouse is valued at $125k in Louisiana. Would a DSCR be the way to go?

[Jonathan Soto]

Quote from @Gregory Carter:

I have this same issue. My property is in a LLC with no mortgage. I paid cash for the property two years ago and want to get some of the equity to purchase another property. My townhouse is valued at $125k in Louisiana. Would a DSCR be the way to go?

 yes dscr would be best route to go. cash out refinance. lets connect if you need any help. best of luck

[Justin Landesman]

@Vinny Muli 

Great question. Holding properties in an LLC (or other legal entity) can offer valuable protection for your personal assets, so I understand why you went that route. The challenge, as you've discovered, is that traditional HELOC lenders typically want the property titled in a personal name rather than an LLC. But I do have lenders that can offer these in entities as well. Don't leave this option OFF the table.

One solution could be a Debt Service Coverage Ratio (DSCR) loan. DSCR loans let you qualify based on the rental income of the property rather than traditional income verification. However, before deciding on a DSCR loan, it’s important to analyze your existing first mortgages—including their rates and the current loan-to-value (LTV). If you have favorable terms on those first mortgages, you might find that a HELOC or a second-position loan is more cost-effective than doing a full refinance or a DSCR loan. It really comes down to running the numbers and seeing which option offers the best balance of costs, monthly payment, and future flexibility.

In short, a DSCR loan might work, but it may not be the cheapest or most suitable option if a second-position loan or HELOC can accomplish the same equity pull with fewer costs or better long-term benefits. The key is to compare each scenario side by side.

[Timothy Hero]

Having brokered over 320 DSCR loans, I may be biased, but go DSCR, lol.