Cash out refinance and entity structure

[Keith A.]

My brother and I recently purchased a SFH for cash and are doing some rehab on it before we lease it. The property is currently in my name but we are in it 50/50.

We would like to lease it and then do a refi and pull some of the money out to buy more properties.

My question is what approach should we use for the entity structure that allows us to also refi. Do I do the refi while it is in my name and then quit claim deed it to a multi-member LLC where my brother and I are 50/50 partners or do the opposite and refi it after it is in an LLC? A little confused over the approach and do not want to create unnecessary work by doing something wrong.

[Matt Lavinder]

I've found local banks are the best for refis because they keep their loans in house and can use some discretion. I have everything in the LLC name and get 5.5%/20 year arm/no points. I usually take out 65% of the appraised value (the amount I have in it) and there is no seasoning time with my lender. As soon as the rehab is complete, we order the appraisal. I have my money back out of the house in two weeks. But, you better have your accounting organized and pro forma ready when going to the banks. They are skeptical of flippers. But, if you show them you know what you are doing, some of the local banks have been great to deal with. This is how I finance most of my deals. Always have multiple lenders you can use as the amount of capital available to local banks can ebb and flow. Also, I've found they are uncomfortable doing more than three houses with any investor until a relationship (i.e. trust) is established. So, don't go to a local bank and expect them to finance your whole portfolio the first year.