To LLC or not to LLC till Refinance

6 Replies

Hello! As I know this is not professional advice till I consult with a professional. I just would like your input on the matter. 

First, My wife and I are weeks away from closing on our first investment opportunity. This is lender financed and we did have to put down 15%. We have a goal of refinancing to pull out our down-payment to be able to move onto another investment. With that said, we would like to put it under an LLC but am conflicted to do so if we are only going to be refinancing in the near future.

Question is LLC it now then go through the whole put it back under our names to refinance or do we leave it under our names then refinance and then LLC it?

I do understand that the lender can call the loan if it is under an LLC, I know that many will state this. Please before you do, can anyone tell me of a case or instance that someone had this happened to them when they put it under an LLC?

I thank you all for your time and input on this matter as It would help me move forward with what we are trying to do. Thank you!

I think your best bet is to go into a few different local banks and talk to them. Ask them these questions. Tell them your plans. Then you'll get an idea if they work with small business or not. I personally have always got my properties via my LLC right from the start.

305-537-6252
Originally posted by @Nicole A. :

I think your best bet is to go into a few different local banks and talk to them. Ask them these questions. Tell them your plans. Then you'll get an idea if they work with small business or not. I personally have always got my properties via my LLC right from the start.

 Thanks Nicole! I appreciate your time and response. I'm assuming you were upfront with the banks prior to getting the ball rolling?

Yup. I looked up a handful of small local banks online first and several of their websites said they worked with small businesses. But I found that once I went in person to talk to them, it wasn't as small business friendly as their website made it sound. I would tell them my business plan of buy and hold rental properties under my LLC, and see how they responded. The bank that worked out for me was of course the one that didn't have any issue with it.

They explained that it'd be no problem for my LLC to have mortgages with them (and of course title the properties in the LLC's name). My LLC did need to open up some banking accounts with them though. Also, since it's an LLC, the mortgages are "commercial" and the interest rate is a touch higher. And finally, my bank (and probably most) did/do require that members of the LLC personally guarantee the loans. That way, if the LLC defaults on one of the mortgages, they can chase after us individually.

The key is to shop around a lot until you find the right one. And yes, be up front and tell them that you have a LLC and want the LLC named on all mortgages and property titles. It might be a little tough, but keep visiting different banks. Once you find the right one, keep going back to them to form that relationship.

305-537-6252

I agree John! My husband and I have talked about this as well! We are unsure if we need to do the back and forth thing as well when we are looking to refinance. Our plan (at the moment) is to get the loan through our name and then transfer to the LLC after we refinance. Unless there is anything that makes sense to go straight to the LLC and keep it there we will plan to do that.

Originally posted by @Nicole A. :

Yup. I looked up a handful of small local banks online first and several of their websites said they worked with small businesses. But I found that once I went in person to talk to them, it wasn't as small business friendly as their website made it sound. I would tell them my business plan of buy and hold rental properties under my LLC, and see how they responded. The bank that worked out for me was of course the one that didn't have any issue with it.

They explained that it'd be no problem for my LLC to have mortgages with them (and of course title the properties in the LLC's name). My LLC did need to open up some banking accounts with them though. Also, since it's an LLC, the mortgages are "commercial" and the interest rate is a touch higher. And finally, my bank (and probably most) did/do require that members of the LLC personally guarantee the loans. That way, if the LLC defaults on one of the mortgages, they can chase after us individually.

The key is to shop around a lot until you find the right one. And yes, be up front and tell them that you have a LLC and want the LLC named on all mortgages and property titles. It might be a little tough, but keep visiting different banks. Once you find the right one, keep going back to them to form that relationship.

Thank you again Nicole! This is very useful and helpful going forward. After I sort this one out, your plan sounds ideal and the way to go. Everything makes sense seeing how the next property I am looking to obtain is going to be a commercial loan for the multifamily. Thank you for your time and have a great weekend!

Originally posted by @Kathryn Baker :

I agree John! My husband and I have talked about this as well! We are unsure if we need to do the back and forth thing as well when we are looking to refinance. Our plan (at the moment) is to get the loan through our name and then transfer to the LLC after we refinance. Unless there is anything that makes sense to go straight to the LLC and keep it there we will plan to do that.

Yes, this is our current plan as well. It's just a way for us to BRRRR into the next investment. Good luck with your process and thank you for adding to this thread. I appreciate you! Have a great weekend!

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