Hello BP community,
I owner 2 SFR and a duplex for couple of years. After learning @ asset protection, I have created and LLC and want to get the duplex moved under the LLC. Can someone point me how I can take care of it in state of Iowa?
Also, I would like to get a refinance or HELOC on that property once it's moved under LLC. I would love to hear from lenders on how I can get a HELOC or cash out refi just using asset on this property.
1. You can move the property to the LLC via quit claim deed.
2. You cannot refinance under an LLC.
All in all, you'd need to talk to local banks and credit unions and see what they have to offer in terms of commercial financing and refinancing.
You can certainly do a cash out refi under your LLC. Banks can be hesitant to do cash out sometimes and may not let you do it with LLC.
Still many options with non-bank lenders.
You can absolutely do a cash out refi or a HELOC once the property is in the LLC. I have property in an LLC and am in the middle of getting a HELOC right now. The bank I am using would also have done the refi had I wanted to go that route, but the HELOC works better for me at this time.
I would quit claim the deed to the LLC.
I don't put little residential places with debt inside LLCs but do have them for my commercial assets.
I especially wouldn't do it in light of my $800 annual CA entity fee, foreign/ out of state or not.
In addition the LLC will '10x' your refi difficulty.
If you do this with a back-door quit claim deed, be sure to update your hazard and title insurance policies. Hate to have you become un-insured in the name of 'asset protection.'
@Alpesh Parmar yes it is a local bank. They do not lend in Iowa.
@Alpesh Parmar If you Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.
Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests.
Thanks @Thomas Franklin . I am aware of the quit claim deed issues so I am planning to move the property to LLC first before trying to refinance.
I’m in the same process and got stuck when I thought about insurance. I know I need to update my coverage but my mortgage company handles the escrow account for insurance payment. Seems like I can’t move it to and LLC for that reason...
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing