Hard Money Loan (refinanced)

[Michelle Costello]

Hello,

I just purchased a property through a hard money lender who loaned the $$ to my LLC. My plan was to refinance into a conventional mortgage to pay my lender back. I went to refinance and the bank won't loan to LLC's on a residential property--it has to be in my name. I was also told that if I were to quick claim my LLC off and put it into my personal name that I would have to wait an addtional 6-12 months to refinance. Has anyone ran into this problem when working with a hard money lender/BRRRR'ing? What are some good options to work around this.

Any advice would be greatly appreciated!

Michelle

[Alex Bekeza]

@Michelle Costello This is one of the most common "obstacles" for BRRRR investors. However, there are non conventional products out there that will allow you to both vest title in your LLC and cash out up to 75% of appraised value as early as 90 days (rather than 6 months with conventional). Rates are a tad higher in general (figure in the mid 5% range at par) but you can still secure a 30 year fixed and for many folks it seems that the benefits of saving a few bps on the rate by going conventional are outweighed by the desire to cash out quicker and vest in an entity. This way you can skip waiting 6 months and quit-claiming post-close which is technically a violation of your loan terms anyway and could allow the bank to call the note due if they wanted to.

These products also become the best option when you don't qualify for conventional due to DTI (say you're self employed or haven't had the same job for two straight years) or if you already have hit the conventional loan limit. These "commercial" products have no limit on the number of properties you can have financed and rather than your income they qualify the loans simply based on your FICO and the subject property's cash flow.