Best Refinancing Options for an LLC Owned Property

[James Henderson]

Hey Bigger Pockets,

I am new to real estate investing and had a quick question. I am going for the BRRRR strategy to start out and had a quick refinancing question. So, I plan on registering my properties under an LLC instead of myself, and was wondering what the best refinancing options are. Can I get a competitive 30 year fixed rate, what do the rates typically look like for lending to a business entity, especially in VA (where I am looking to start)? After Googling "LLC Real Estate Financing Virginia" I saw loans for 30 year fixed "as low as 4.95%", but assuming the rates are higher than a personal mortgage loan. So, is this just one of the costs of having properties in an LLC (cashflow is not as great as it would be in your personal name, but you are covered from liability)? Thanks in advance.

[Andrew Postell]

@James Henderson if you own a property in your LLC you can still receive Fannie/Freddie money on your property. As mentioned above, you would just transfer the name of the property to your personal name at closing (not before) and then you can transfer it back to your LLC if you want. One thing to keep in mind, these are reasonable loans to use if it is a SINGLE member LLC. If you have several partners there are other things to consider here but for a Single Member LLC this is fine. Also, this is NOT classified as a sale. I mean, I can't speak for every state here but I have worked in lots of them and as long as the closing attorney/title company see's it is your LLC then no sale occurs. It's just a title change.

@Rudolph T. you will have something different to face if your properties are located in Florida - transfer tax.  In Florida if you transfer the ownership in any way then the state gets to tax you based on your total loan amount.  So check with your title company there on what that fee will be before you make a decision if this is the route for you to take.

Hope all of this makes sense.  Thanks!