Family loan to LLC for all cash rental purchase and refinancing

[Andrew Pandolfino]

Hello BP community, I have a bit of a tricky situation and am hoping to get some advice on how to best proceed with my first real estate transaction. I have recently put an offer on a multifamily property that I had intended to buy through a recently formed single-member LLC. The offer is for all cash. I received a loan from a family member to the LLC for the amount of the property plus some repairs that are needed. This is a short sale subject to bank approval and financing is out of the picture because I will be needed to obtain an updated Certificate of Occupancy within 60 days after closing. The goal is to make the repairs, obtain CO, and then refinance to pay back the majority of the loan.

After some more research and speaking with a few lenders I have discovered that financing obtained through the LLC will have about a 1% or so higher interest rate as compared to what I could get personally. I read about a lot of people "taking the risk" of triggering the Due On Sale clause and obtaining personal financing for more attractive lending rates, and then transferring the title over to their LLC's for liability protection.

My main question is if it is legitimate for me to pull the money that my single member LLC received via family member loan out of the business and into my personal account to complete the purchase of this property. Then make repairs while the property is being "seasoned," and refinance after the 6 months or so and put the majority of that money back into the business to then repay the loan.

Two other quick notes, I do not intend on living in this property, and I have a good amount of money in my personal accounts already, but not enough for the full purchase.

Any advice you all have will be greatly appreciated, thanks in advance!