How to buy and Refi in LLC

Question

My partner and I recently finished and waiting to close on our first flip and we’re now looking to BRRRR as well as flip more property. My question is How and what do you need to purchase and refi in LLC name?

Stephanie P. · Answer

@Shawn Gardner

Here's your list:

LLC docs including certificate of good standing, articles of incorporation, operating agreement, W9, EIN letter

If it's a refinance after you've done the rehab, make sure the property is stabilized (rented and all construction is done) and make sure you've gone through the requisite seasoning period on title.  Usually 6 months, sometimes 3.

Have good credit or make sure the primary partner on the LLC (more than an 80% partner) has the best credit

Get the contact name and information for your hazard insurance company handy.

Use the same title company you just closed with and ask for a break on the title insurance (ask for a reissue rate).  Have your HUD from the purchase ready on submission.

Pay any payments to the new lender on time and use a check or some other form of verifiable source for mortgage history.

Use a general contractor for repairs to the property and make sure you keep a list of what repairs have been completed.

Cash for reserves

That should get you going.

Stephanie

Kathy Utiss · Answer

Hope you can tell me if this is possible or not.

Know of property nicely discounted below appraised value (66% ltv)

Can one use transactional funds to pay off seller

Then create a note(refinance) as they're the new owner of property

Then sell off the note? Is there a seasoning requirement?

This is for a commercial note creation 1st lien position.

No owner financing The note will debt service well. Even at a 75% calculation mentioned for a DTI

In my case as a principal I've been in both the banking and transportation industry since before 1994. I've been rebuilding my credit. My last bk will fall off my cbr this year. My scores are at 600/621/582

I also have an associate willing to go on loan with me if necessary with a score of 770 or above. She was a school teacher in Texas. In my case to better my credit I need more income. A survival money job just doesn't do this. Hence, why I've looked many years for a good opportunity. I also have another associate with a 650 score if that would work as well.

We've also found a few properties that make sense. Maybe, not as nicely discounted as this property. However, they make sense with the asking price and the NOI to adequately debt service.

All answers are so appreciated. :)

Rob Beeman · Answer

@Shawn Gardner - For starters - wise move to always buy assets in an entity (LLC), not personally (your name).

Stephanie was dead on with her list. However, if the property that you are buying is in a different state than where your LLC was formed, you will probably need to file a "doing business as a foreign entity" form with the state where the property is located (a way of them getting a few tax dollars). This will be required typically if you are gaining any financing on the property (lender might require it)(whether short-term loan or long-term loan, like on the BRRRR method). If you need help on either flip or hold financing to the LLC - PM me.

Shawn Gardner · Answer

@Stephanie P.

Thank!!  This was very informative.

How to buy and Refi in LLC

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