My name is Moshe and I am interested in buying a cash only property using hard money, rehabbing and doing a cash out refi to hold the investment. I understand that you need an LLC to get the hard money loan which isn't a problem. The problem seems to be that its hard to do a cash out refi under an LLC so you would have to transfer it under one's name because they require the indeed to be under an individual's name. What is the best practice without running into roadblocks to accomplish the buy and hold strategy. I really believe in it long term and I already have one multi family under my belt waiting to refi. Post this first deal I have about 50K left to spend on my next deals, that is why I want to use the hard money approach.
Thanks for your help guys!
@Moshe Bloorian If that is what your bank wants, then do it. You can put it in your name and transfer to an LLC later. Technically that can trigger the due on sale clause but a lot of investors do it and the feeling is that as long as the bank is getting paid, they overlook it. Obviously consult an attorney before doing anything and see what they say.
You should be able to transfer title from LLC to your name when you do the refinance. This used to reset the seasoning period, but Fannie Mae recently allowed the time owned in your LLC towards your 6-month seasoning for cash-out refinances. If your loan officer says you can't do it... find another one.
@Moshe Bloorian I can't really add anymore specific information other than what @Grant Rothenburger and @Nghi Le already put because they answered your question exactly. What I can offer is encouragement that it isn't that big of a deal as you or whoever is telling you is make it seem. They talk about this quite often on the podcast that yes technically you can't do it and blah blah blah but really Yes you will be operating in a greyish area but you should be okay. However this is assuming you are making payments on time and doing what you say you will, as far as fixing up or taking care of the property. As long as the bank gets their money and you don't become a pain in their azz you should be fine. Good luck brother and don't let that excuse keep you from making it happen!
Thanks guys I appreciate the advice!
I think it really depends on the bank. Try asking around for different lenders that might be more flexible.
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