This is for CA.
Am in the process of buying a 4-plex all cash. Conventional loan was approved but some repairs
need to be made, which the REO bank does not want to do.
My goal is to be able to buy it all cash right now, and then refinance after making those minor
repairs. But I also want to make sure i dont get hit by the "Refi with cash out" and in the process
making the loan impossible or impractical.
A broker mentioned buying the property in an LLC (that I or my spouse owns) for all cash, but have
the escrow company create a NOTE, that I as the financier would carry.
Is this really possible? And would this get around the usual "refi with cash out" provisions for a
non-conventional loan?
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
15y
Creating the note is possible, it's what you can do with the note that is the problem. I did this several years ago with a multi-member LLC, where one member took out a D-T with the expectation he could later sell (after some 12+ months of seasoning) to a note broker/buyer. Same experience as Ralph and Steve point out. Your note buyer's market would only be a principal buyer who didn't care about the LLC/member association. Other possible options (trying to stay creative): get an in-law to lend via a SDIRA or something similar. Then refi and cash them out.