Cash out refinance in an LLC

[Jeff Piscioniere]

Hi BP Community,

My partners and I are looking to pull out equity of our investment property to move on to our next purchase. Shortly after we purchased two and a half years ago we did a quit claim from the mortgage in one of the 3 partner's name to our LLC. If we do a refi can we do it under the LLC's name or does the deed need to be switched back to that partner's name as his wife is suggesting? As stated, we closed on the property in August of 2018.

Thank you in advance!

[Stephanie P.]

Originally posted by @Jeff Piscioniere:

Hi BP Community,

My partners and I are looking to pull out equity of our investment property to move on to our next purchase. Shortly after we purchased two and a half years ago we did a quit claim from the mortgage in one of the 3 partner's name to our LLC. If we do a refi can we do it under the LLC's name or does the deed need to be switched back to that partner's name as his wife is suggesting? As stated, we closed on the property in August of 2018.

Thank you in advance!

I would refinance it in the LLC and leave things alone. The conventional financing on this will be arduous given the number of owners/partners and rates on the no income verification loans that will close this in the LLC are in the 4's and 5's on the high side at 75% ltv. Save yourself some hassle and just get a DSCR loan. You can go up to 80% on a rate and term, but if cash out is the goal, 75% will be your max with a decent rate.

I don't know how much the loan amount is, but on a 200K loan at 3.875% (Fannie rate as of yesterday on an investor, cash out, refinance with 6 months on title, 750 mid score) the principal and interest payment is $940. Cash out on a 200K loan at 75% with a 740 mid score, same 6 months on title is 4.5% and 2 points, but it stays in the LLC and you don't need to take it in and out. Monthly payment on that one is $1013. I know $73 and the 2 points can be a lot of money over time, but with multiple borrowers and multiple sets of tax returns and taking the ownership out of the LLC and then putting it back in later, it seems the risk and hassle aren't going to be worth the cost (at least to me).

One girl's perspective

Stephanie