I was recently doing some research both online and speaking to a couple of lenders. I wanted to hear from other investors, lenders, etc from the BP family. I'm sure many of you have experienced this in some shape or form.
I want to cash out refi on a property I purchased all cash for. I purchased the property with an LLC. Recently I was talking to a lender and also researched about the process. I found out two solutions. The lender told me that the only way that the cash out refi could be accomplished is if I quitclaim deed the property into the name of an actual person, complete the refi, and quitclaim deed it back. I also read that there are ways, lenders that will actually do the refi while the property is in the name of an llc.
Does anyone have any experience with this? What is the difference in the length of time it will take to do? Is one method better than the other? Lastly, does anyone have any contacts for lenders that can do the refi while the property is in the name of an LLC?
Hard Money Lender · Sea Girt, NJ · Member since 2012 · 125 posts · 37 votes
6y
"No doc" rental property loans are an increasingly popular product among hard money lenders where the loan is underwritten with a borrower's credit score and the property's cash flow. What is nice is that you can borrower in the name of an LLC, with high leverage, and rates that are extremely competitive. That, along with the ease and speed of closing, can make them an attractive product.
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
6y
@Keith Jefferson, find a new lender. They don't know what they are talking about.
Go to a small community bank or credit union and talk to their commercial lending people. They will often have portfolio loans (lending their own money, not reselling the loan). You can expect an ARM (adjustable rate mortgage), 15-20 year amortization, and 75-80% LTV.
You can also look for a private mortgage. Some hard money lenders offer 30 year fixes rate private money mortgages. Generally there seems to be some prepayment penalties and points paid up front.
Your lender is probably only familiar with conforming fannie mae/Freddie mac loans.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
In order to get the best rate and terms you will have to refi in your personal name which is probably what the mortgage broker thought you wanted to do. In order to refi in the LLC you want to look for a local lender that does portfolio loans and/or an asset based lender of which there are many. They are basically smaller commercial loans.
These loans will not have as favorable terms or rates as your standard conventional loan, but will allow you borrow in the LLC name as opposed to your personal name.
Investor · Member since 2020 · 324 posts · 278 votes
6y
Small Local bank! Especially if you have several other properties. The personal name strategy works great if you have a couple properties, but after awhile it gets hairy. I have all my properties in LLC's and refi with local banks or credit unions. The rates are still decent usually prime +2 (so 5 or 5.5%).
I like the small local bank and the refi in the LLC as it stays off my credit report which as you get into 20+ properties can start to look bad quickly!
Hard Money Lender · Sea Girt, NJ · Member since 2012 · 125 posts · 37 votes
6y
"No doc" rental property loans are an increasingly popular product among hard money lenders where the loan is underwritten with a borrower's credit score and the property's cash flow. What is nice is that you can borrower in the name of an LLC, with high leverage, and rates that are extremely competitive. That, along with the ease and speed of closing, can make them an attractive product.
Thank you everyone. You've all given me good info. I'm going to check local banks and Hard money lenders. One of my main goals is to not have my personal credit run again and get a hard inquiry on it. So if I can find a lender that will allow me to refi in the llc so that way I don't have to use my personal credit and can close quickly (not in 30 to 45 days which I've been told), that would be ideal.