Delayed Financing Question

[James Palassis]

I have a title/deed question on my BRRRR using delayed financing. This is my first B&H property, I paid cash and took title in my LLC's name. My rehab is complete and it's being marketed for rent. I'd like to refi out of it, but I'm curious how that would work since my LLC has the deed, and I have had a hard time finding a lender that will cashout refi in an LLC's name. Is this a possibility? Would I have to "sell" it from the LLC and take title in my personal name to get the loan, then transfer title back to the LLC once the transaction is complete? (I'm aware of the due on sale clause possibility)

A cash out refi is my first preference, but I'm also considering a HELOC collateralized against the property, which seems like an easier solution if I can't get around the issues with the refi.

If anyone can help me out with this, I would GREATLY appreciate it! Wishing everyone much success in 2019!

Jay

[Andrew Postell]

@James Palassis I'll address the LLC issue first and then the Delayed Financing item.

If you are using a Fannie/Freddie loan then those loan types require you to close in your name.  And the property to be in your name as well.  We try to get Fannie/Freddie type of loans first because the rate and terms are so much better than other loans.  That allows us to cash flow more....which in turn allows for us to qualify for more loans later on.  

So what most investors do is they close in their name and then title the property back to their LLC after closing. Please understand I am not saying that titling a property in an LLC is the right strategy...I am just saying if that's what you want to do then that's how you do it with a Fannie/Freddie loan.

Now, let's say that removing your LLC from title is a deal breaker for your strategy. Then you need to avoid Fannie/Freddie loans. You would receive a commercial/portfolio type of loan. Most of those will be 20 year adjustable rate loans that have a higher rate. Many investors are very successful with these types of loans. Again, not advocating for an against anything just pointing out the differences.

So if you did use commercial/portfolio loans...they may not even have "delayed financing" as an option.  Or they may/may not have any requirements to take cash out in the first place. Since each bank decides how they lend on the commercial/portfolio loans then there's not a reliable method to predicts what each bank will require.

*WHEW*   That's a lot!  But wait....there's more!

I wrote an entire post on the proper method to structure a cash purchase and you can find that post HERE

Feel free to tag me with anything additional. Thanks!