LLC Cash Out Refinance in Maryland

[Erick Garske]

I have some property in Baltimore City held under my LLC. I would like to do a cash out refinance, but when the properties were purchased, the title was recorded under the name of the LLC. This had been done for liability protection.

In speaking with a lender, I am told that the properties would need to be held in my name before the conventional loan could be closed. The lender explained that this is necessary in order to sell the loan to fannie mae.

The downside of this, is the that the state of Maryland requires that a transfer fee be paid on top of the nominal recording. The transfer fee would amount to the same cost as actually closing on the property. In fact, it would be like paying an additional two points for the loan. The loan is no points at 4.75.

So the dilemma is whether or not to pay for the transfer cost of holding title in my name verses an LLC in order to secure the loan, or to seek out a non recourse loan in order to preserve the current recording of the title.

Thanks in advance for your advice.

[Ned Carey]

This is something that people talking about real estate investing finance rarely mention but It is one of most important issues.  Does the lender finance LLCs or other entities?

An LLC or any other entity requires a commercial loan. The best place to get them is smaller local or regional banks. Since SFHs mean smaller loans, this can make it tougher to get these loans. The best thing to do is keep looking for and talking to these smaller local lenders. Sometimes these loans are available for a window of opportunity and then the window closes. This is why you need to keep in touch with the lenders.