Refinancing in a LLC

[Erik Stone]

We paid cash for a house we were going to flip. We titled the house in the LLC. Now We want to BRRRR this unit. The rehad turned out very good. This will make a great rental. I would like to keep it in my LLC. What options do I have for cash out REFI. Thank s in advance!

[Scott Smith]

Hey Eric,

The main issue with refinancing through an LLC is the rates are low, when they are even offered, by a bank direct to the LLC. Otherwise some people transfer the property to their own name to refinance with the intention of transferring the property back into the LLC, but this runs the risk of getting hit by the Due on Sale Clause.

The smoothest strategy I have seen for refinancing while maintaining protection is when investors introduce a Land Trust as a "middle-man." To refinance you transfer the property back into your personal name for the best rates, then you transfer it into the Land Trust. The Land Trust is a protected transfer thanks to the St Germain Act, since the Land Trust is an Inter Vivos Trust (an estate planning tool.) From there you assign the LLC as the beneficiary and yourself as the Trustee. If you want some privacy you can even have your attorney sign as the Nominee (short-term) Trustee upon the formation of the document, so the attorneys name is on public record instead of your own and you have a layer of protection thanks to the attorney-client privilege.

You can also read more on the LLC lending strategy and about introducing anonymity through those links.

I am very comfortable with these entities, so if you have more questions feel free to reply and let me know!