so frustrated, can't tap into equity in Texas due to LLC

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so frustrated, can't tap into equity in Texas due to LLC

Keith A.
Rental Property Investor · TX · Member since 2019 · 236 posts · 392 votes

Hi All, so i posted last week that i have several free and clear properties that I would like to tap into the equity to buy an additional property. Problem is that in Texas by law they don't offer HELOC's on investment properties (well Wells Fargo sort of does). Also, my properties are under my LLC.... which makes it even harder. Commercial portfolio/lines of credit lenders won't lend to LLC properties are zoned residential. So, as of right now after many calls I can't find a way to tap into my equity for my residential investment properties that I own free and clear under an LLC. Anyone else faced with this and found a resolution? Thinking about just using a traditional investment home loan and putting the new property under my name... but not fond of that idea. How are people BRRRR'ing their properties in Texas if they are under an LLC?

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John Chapman
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
7y

Not sure where you are looking but lots of local banks lend on SFRs.  The ones I've used require LLCs with a personal guarantee. It's commercial financing so the terms aren't as great as conventional financing.  Frankly, I would transfer them back to your own name and just get conventional financing.  If you carry good insurance, you should be totally fine.  

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  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    7y

    Not sure where you are looking but lots of local banks lend on SFRs.  The ones I've used require LLCs with a personal guarantee. It's commercial financing so the terms aren't as great as conventional financing.  Frankly, I would transfer them back to your own name and just get conventional financing.  If you carry good insurance, you should be totally fine.  

    1Reply
  • Tim Johnson
    Lender · Grand Rapids, MI · Member since 2018 · 703 posts · 446 votes
    7y

    why dont you do a cash out refi on them?  You can do this no problem in texas on investment property?

    You can dscr loan and you don't have to provide income docs or tax returns

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  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    7y

    Yep, that's Texas. It's more expensive, but many larger funds have popped up that cater to both SFR rental practices and flippers. They are much more expensive than the bank, but they are set up to underwrite loans for investment properties. That might be a possibility, but banks, particularly in TX, aren't set up to do what you seek.

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  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Keith A. Why not just put them in your name and then get a HELOC or refinance ?

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  • George DespotopoulosBusiness Member
    Lender · New York, NY · Member since 2016 · 936 posts · 287 votes
    7y

    @Keith A. depending on the values of your properties, this seems to be a perfect candidate for a non-bank lender. You could own the properties in an LLC. Each property will qualify on it's own (unless you're pooling them under a portfolio loan). Your rate will depend on the loan amount/property value, LTV, your FICO score, the property type, and the property's cash-flow. These loans do not take into consideration your personal credit or debt-to-income. You would be able to get a 30 yr fixed or an ARM for a slightly lower rate. You won't need to provide tax returns or proof of income.

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  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    7y

    @Keith A. Like other above have pointed out, you need to do a bit more shopping. There is an abundance of commercial lending options in Texas that will allow LLC vesting on a 30 year fixed mortgage and cash you out as high as 75% LTV. Rates are higher than conventional but if you have strong FICO and the property cash flows then you should be able to land something in the 5% and 6% range.

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