Still learning, curious about hard money and refi out

5 Replies

So I'm reading through "the book on investing in real estate with no and low money down".. I'm curious, is it possible or normal to create an LLC, obtain a hard money loan under the LLC and later refinance out of the hard money loan into a conventional bank loan, again with the LLC as owner? This is in Las Vegas and I'm just trying to get ideas on if this is common practice and if so what might be involved with all of this.

Thank you,

Nick C.

@Nickolas Cikity

Hey Nick! Yes this is definitely possible. It's a common practice that you may also see around BP known as BRRRR. That's my current strategy and there is a BP book all about it!

Eddie

Wow! I was definitely looking into BRRRR as a strategy but had didn't know this was common from hard money to conventional. I guess I'm curious about if refinancing to a conventional loan with the owner being an LLC is common? Since from what I've heard banks don't like or flat out won't loan to an LLC..?

No, I don't think conventional loan would take LLC. Correct me if I'm wrong, as I know, conventional loan can only be under personal name.
I wonder, if a person is qualified for a conventional loan, why want to have expensive hard money loan?

The only time that I got hard money loan a few years ago because I was not qualified for conventional loan anymore.  
Hard money loan charged me 5% origination fee and 11% interest rate.  30% down payment.  That’s super expensive!  

I just sold my properties last 2 months to pay off the loans.

So my thinking was create LLC, obtain a hard money loan for the property through the LLC and then refinance to the lower interest conventional loan. Basically trying to get into a conventional loan with the owner being an LLC since banks don't loan to LLC's. I was hoping they would consider a refinance for an LLC.

Some banks will allow it and some will not allow it to be in an LLC. The alternative option is to take ownership as an individual and then doing a quit claim deed after closing thus putting it into your LLC name. But be careful as some lenders will occasionally check for stuff like that and if they find out may call the balance due.

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