Refi options for BRRRR?

[Brian LaPorte]

Interested in hearing your preferred method of refi when completing a BRRRR. Trying to plan ahead, by April we'll be refi'ing 4+ properties, each with varying levels of rehab - three duplexes and one 4-unit.

I know we're limited in number of conventional loans that can be tagged to our names. It's just myself and a biz partner. We put each of our properties in an LLC. I'm currently researching our options and would appreciate any advice as we're formulating our system for acquiring good BRRRR properties at a pace of 1-2 per month.

Thanks!

Brian

[Kevin Romines]

@Brian LaPorte If it were me, I would be interested in getting the best terms I could on each of these rentals. Lower payments equals more cash flow. 

If that was one of the targets and the other target was to keep your properties in an LLC, I would consider the following: As of just over a year ago, Fannie Mae changed their rules regarding transferring the properties to an LLC. If the Fannie Mae loan was done after June 1 2016, they now allow you to transfer the title of the property from your personal name to an LLC without it triggering the due on sale clause, so long as the borrowers are the majority members of the LLC.

Fannie Mae will get you the best possible fixed rates, but it comes with limitations. You can only have 10 financed properties, however you can put 10 in your name and 10 in your business partners name and get 20 before you would have to look at other options, and you must finance the properties in your personal name and then transfer after closing. 

Next in line would be the Non-QM loans also known as portfolio loans. These investor products will allow the loan and title to be in the name of the LLC however you will have to sign a personal guarantee. There are typically either no limits on the numbers of financed properties or very high limits. The rates are slightly higher than the Fannie Mae loans, but you have much more flexibility with these loans, such as bank statement loans, Investor Cash Flow loans - where the rents must equal or be more than the PITI payment and that's the only debt ratio, no income or employment is put on the application.

The last option to consider would be a commercial loan or a commercial blanket loan. These loans can be made in the name of the LLC and are either Non-Recourse or a Recourse loan. These loans have rates comparable to the Non-QM / portfolio loans, however they are shorter terms of 3/1, 5/1, 7/1, & 10/1 Arms or they are 3/3, 5/5, 7/7, 10/10 fixed rates with a balloon payment. So they can cause you to need to refinance every so many years?

If it were me, I would look at things in that context and order of priority. I hope this helps?