Cash out refinance on rental bought in cash

[Scott Adams]

Folks I am trying to find a lender in KC that will do a cash out refi on a rental we purchased all cash earlier this year. We used all cash to be competitive in an aggressive market here in KC. My intent was to use my cash to make the deal then put a mortgage on the prop to put my cash reserves back. Also I bought the prop thru a LLC we created, and finding some banks won't do a cash out refi thru a LLC. Anyone have thought there? Thanks for your help!

[Cameron Pendergraft]

Scott,

For Fannie/Freddie, they're going to want to see your income to qualify the loan. Your llc I'm assuming hasn't had any income so there's the rub. 

I've heard commercial lenders will lend on the investment alone but this won't be a traditional home mortgage and you'd be looking at higher rates/shorter amortization possibly.

There's also the crowd that will say to deed the property back to your own name, finance it, and then deed the property back to your LLC. This would potentially trigger the alienation/due on sale clause of your mortgage but there's a long history of most banks letting this go as long as the mortgage stays paid to date. The risk there though is the bank does legally have the right to call your note if you transfer title. I honestly don't follow interest rates that well but if they're stagnant or decreasing, a bank has little incentive to call a performing note. If rates start rising, it might be more appealing for a bank to enforce that clause. There are pros/cons to this, I haven't done it yet but am considering it.

Hope this helps,

Cameron