Cash Out Refi for Properties in Trust LLC

[N M Clarke]

I have 4 properties (2 MF, 2 SFR) in California in a trust LLC. I am the sole trustee and also one of the beneficiaries. All properties are owned free and clear (no debt) and we would like to cash out refi so we can finance some renovations to one property and to purchase another multi-family and grow the portfolio. Targeting approx $1.6M cash out, which would only be 17% of total value of portfolio. LLC generates good income because property tax is low (properties purchased in 70s) and relatively low operating expenses.

My understanding is that lenders look at my personal income rather than the LLC income to determine max loan amount, which is problematic because I just resigned my high paying position in Aug.

How do investors tap equity in these instances? Any advice greatly appreciated.

[Scott Lundgren]

@ N M Clarke 

You can avoid the personal w2 income restrictions by getting into Private, commercial, or Non-conventional loans. Especially with the fact that you have 100% equity and only need to pull out 17%. Lenders will base the leverage on the performance of the portfolio, not your personal income. This will cost a couple of points more compared to a conventional Fannie Mae backed loan, and your downpayment on the new loan will be 50% on ave. The downpayment is steep but after 2 years you can refinance upto 75% and then repeat the process again as needed. You also want to have a consultation about using a 1031 exchange so you don't pay capital gains. That will cost you more than any leveraging fee's or rates. The catch of the 1031 is identifying properties in a short window (usually 90days or less). If you want to get some examples of properties you can invest into outside of your local market to get a dramatically higher ROI, or an introduction to some of the lenders that would allow you to accomplish this I would be willing to jump on a call anytime.