Can you refinance is your property is under an LLC

[Rodney Wright]

I'm buying a multifamily unit. Should I put this property under my LLC or should I leave it in my name? Would I be able to refinance if it is under the LLC? Aslo if I leave it under my name my tenants can find my personal address. Are they any other choices available?

[Russell Gronsky]

Is this multi-family building 4 units or less? OR is it 5+ units? If 4 or less, you should buy initially through the LLC, if the LLC has the cash. Otherwise, you'll pay extra charges later to transfer it. However, if your LLC doesn't have the cash, you'll have to take a loan out and banks balk at loaning to LLCs. They will want your name on the note.

So, you can take a loan out in your name and then notify the bank after the transaction is complete that you plan to transfer the building to your LLC. Your main concern here is to make sure the bank doesn't get spooked and exercise the "Due on Sale" clause that is included in every loan that says if title is transferred, the bank can call your loan immediately. Normally, the bank will be okay with it as long as you tell them ahead of time and the payments keep coming in each month. However, as a precaution, when you are initially setting up your loan, tell the loan officer that you may want to move title to an LLC in the future and see what they say. You don't want to get through the process of getting the loan, only to have the bank deny your request to move title.

Also, if you put the property into an LLC and then want to refi, you'll have to pull it our of the LLC, refi in your name, then put it back into the LLC. Huge pain and as everything else, comes with costs. So, if you plan on doing a refi and putting the property into an LLC, buy it under your name, do the refi, then move it to an LLC to minimize fees.

I am not sure what your concern is with tenants finding your address? I suppose they can find your name in county records and then skip trace you, but I have no idea why they would want to do that? In my 15 years of being a landlord, I've never had a tenant search for me, at least not to my knowledge. But, if you are worried about it, you can put the property in a trust. Moving the property into an LLC should also get your name off the county records, I think.

On the flip side, if the building is 5+ units, you can do a commercial loan on it. Some commercial loans require you to put the property into an LLC so the commercial space approaches this topic in a different way than residential. I'm not smart enough in this space to give you any advice other than talking to a commercial lender about it.