Changing ownership of an LLC

[Clayton Bradley]

Hi everyone,

I was wondering if anyone had any insight into a question I had about changing the ownership percentages of an LLC. I have two partners, and we each own 1/3 of an LLC, through which we purchased a single family rental. We have employed the BRRRR method with the the property and are in the refinance stage. Because we purchased to property with a hard money loan on a 6-month term, we have had some issues securing a refinance loan. The options we do have are advising me to change the percentage of ownership in order to get the best terms. For context, my other two partners have less than ideal credit score, and mine if in the low 700s.

So, my question is this: is it in any way illegal to change the ownership percentages of each partner in the LLC in order to secure a loan, then switch the ownership percentages back at a later date? Just trying to finish out our first project without crossing any lines accidentally.

Thanks!