Title finance questions

Member since 2021 · 1 post · 0 votes

We are about to purchase our first rental with cash. First question is how to put the title into our LLC when we purchase? Second question is when we go to cash out refinance, will the title stay in the LLC or do we have to put it into one of our names to get the financing?

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Lien VuongBusiness Member

Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes

Yes to purchase under LLC, that's no problem, just inform your closing party. Secondly, if you want to maintain the LLC protected you will have to do a cash out refi with a commercial lender as anything in an LLC would require that type of loan product and a required statement of income and expenses with the property. You can deed it back into your own names but you will remove the protected but gain the ability to use residential financing.

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Douglas Mcqueen
Rental Property Investor · Virginia Beach, VA (Virginia Beach) · Member since 2019 · 173 posts · 129 votes
5y
@Norman Johnston As for the first question, you can put the property in your LLC fairly easily just need to let your Closing Attorney Title company know your intentions, depending on your sale contract you may need to get permission in writing from the seller, if you haven't gone under contract you can either write the contract in the name of the LLC or include verbiage that allows you to assign to owned subsidiaries.
For the second question you can refinance into the LLC, however it will be up to the lender whether they will offer the LLC financing much like its up to them whether they will offer you financing.
My recommendation is to start reaching out to local lenders now and start building that relationship especially if the LLC is new and specific to this property. As you move forward make sure you are keeping good accounting records and are creating a record of income for the bank to evaluate once the re-finance time comes.
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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
5y
Yes to purchase under LLC, that's no problem, just inform your closing party. Secondly, if you want to maintain the LLC protected you will have to do a cash out refi with a commercial lender as anything in an LLC would require that type of loan product and a required statement of income and expenses with the property. You can deed it back into your own names but you will remove the protected but gain the ability to use residential financing.
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Norm Johnston
Member since 2021 · 1 post · 0 votes
5y
Thank you for the info!
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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
5y
@Norman Johnston
When you do your sale/purchase contract, the buyer should be "Norman Johnston or an entity to be formed" or if you already ahve the LLC formed put the LLC as the buyer. If you are already under contract, you'll need to modify the contract to change the legal buyer.
Legal entities such as LLC's are NOT eligible for conforming residential loans. You will have to take out a commercial loan. Find a commercial lender. Residential lenders will say you should move Title into your personal name, take out a personal mortgage, then quit claim deed the Title back to your LLC. That is a complete mess that will screw up your limited liability protection I assume you are looking for by the LLC. The mortgage will be in your name, not hte LLC.. there are a bunch of issues I've posted on before.
Good luck.
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