Refinance into LLC questions

[Nate Paoinchantara]

All,

I am running into a bank offer that I would like to get you all’s opinion -

In the past 3 years, we purchased 8 rental SFHs in our personal name with 30 yrs fixed, average 5% interest. Now, we have an offer from a local bank to refinance all properties into one loan and we can have the loan in LLC. Here are the terms,

• -Prime+1.48% fixed at closing and adjusting every 4 yrs. 20 yrs amortization.

• -0.5% Origination fee

• -Borrower responsible for all other cost associated. (title + appraisal)

• -1% of prepayment penalty if A.) Balance paid in full with internal or external refinancing or B.) More than 20% of remaining balance is repaid annually through source other than cash flow.

All properties are currently leased with ARV at 1.1M with mortgage about 700k.

If we decide to move forward on refinancing, the lender will also offer additional $600k LOC. Here are the LOC terms-

• -0.5% Origination fee

• -Similar rate with the refinance (first 3 months interest only)

• -First ranking mortgager of real estate and assignment of lease and rents on each property financed in this program

We are considering this option as we are planning to obtain more properties to reach our 40 doors goal in the next 4 yrs. We also want to take the current debt out of our name and put in an LLC. Since this is the first time we are dealing with commercial loan like this, I am wondering about terms or what questions I should be asking. Also I have a few questions here-

• -What is the best economical way to handle title? We have title insurance in all properties, so what would be the best way for endorsement and at what cost?

• -What would work best for us if we want to sell any properties? (so we can negotiate with our lender)

I do appreciate every comment!