CASH OUT REFI CONUNDRUM

6 Replies

Hey, Bigger Pockets folks! I took the challenge last year, I think Brandon gave me about 90 days to buy a property. I have been thinking about it for years. I started doing flips, I'm a realtor, but I never got into buying and hold. The Brrrr concept really has taken hold and I ended up buying 3 properties. I bought them in an LLC, one for each. I have insurance, did renovations... now it's time to cash out and do it again.

I'm sure many of you already guess what the issue is, for those who haven't... turns out banks don't like to lend to newly formed LLC's. So much so, that they will charge 3% higher, 3 points plus only finance with a guaranteed rate for 5 years with a max term of 20 years. You can imagine (experts and newbies alike) what that does for my cash flow.

My options seem to be, flip the properties back into my name and pay 4% transfer tax, find a mortgage, then either put it back in an LLC or I suppose just keep it in my name. I am cognizant (or paranoid) that should something happen in one... my liability may extend to the other properties in my portfolio, which I intend to grow to 20 by the end of 2020.

I have three properties that will refi for a pretty decent amount. Question is: WHAT DO I DO?

Thank you, everyone! PS I just ordered Long-Distance Real Estate Investing, and after listening to SHOW 340 I'm thinking Kansas City here I come! Vendors, wholesalers, property managers, contractors, PML folks, feel free to reach out regarding any useful info. Thanks, everyone.

@Jared Kotler How many commercial lenders have you spoken? The 3% higher rate seems very high.  Also, why not refinance out to conventional lending (if you have spots) and lock in the historically low rates?  PM me... happy to share my lenders to help you solve this problem.

Hi @Jared Kotler I was shopping around a non-conforming loan to a bunch of local lenders about a month ago.  My difference was that the properties are in my personal name.  Since I had a non-conforming loan in the mix most lenders were looking to loan on the entire portfolio as a commercial loan.

I was getting similar quotes to what you are getting now with the exception of the points.  I was pretty consistently getting quotes for 1 point.  However, everything else was right around 6% and I was getting quotes of 20-25 years with a 5 year lock.  I never pulled the trigger on it but I might pop back to get updated rate quotes from them just to see if there was a drop in the last 30 days for Commercial rates.

It's anecdotal but wanted to give you some recent experience from someone in the same boat, just not an LLC.

@Whitney Hutten

I’m new at bigger pockets forum. I reached out here with a PM, and on your personal website. I just realized how to reply, so here’s a third reply. I appreciate your time, would love to reciprocate and look forward to discussing this matter with whoever you feel can help to get this

Again, thank you and l look forward to taking actionable steps with any recommendations you provide.

Best regards,

Jared.

Transfer into own name, refinance, transfer back into LLC

Use portfolio lender such as LendingOne

Keep in own name

Use Non-am lenders