Transfer Title / LLC Lending
I will try to keep this as brief as possible :
Partner and I purchased 2 rental properties in Florida with cash under one LLC (lets call this LLC 1).
Now looking to do a cash out refinance and having trouble for a multitude of reasons :
1.) Property is a short term rental
2.) Property is titled in an LLC and not to us as individuals
Therefore, from my understanding, the property does not fall into the commercial property or residential property guidelines and is not a good fit for any form of traditional financing.
After speaking to a commercial real estate banker with Wells Fargo he advised us to use the existing LLC 1 as an operating company and transfer the titles to a new LLC that acts as a holding company, which we will call LLC 2 and LLC 3.
Have LLC 1 lease the properties from LLC 2 and LLC 3 and pay them a fixed rent amount. These properties could then possibly meet the guidelines for a portfolio type loan.
I think the strategy behind this is to leverage the existing one year of tax returns on LLC 1 and then the operating history of LLC 1 could function as a "secondary form of repayment" in conjunction with the fixed lease in place. As individuals, my partner and I have strong PFS's and I think will almost certainly need to personally guarantee the loans.
I think we have a very solid model going with each property generating around $4500/month with costs well below $2000/month.
Our goal is to get cash out of these properties (appraise for $300k each). Ideally a 70-80% LTV on a 10+ year note at less than a 5% interest rate with low closing costs. (Is this too optimistic?)
We would use this cash to :
1.) Fund acquisitions across the US with a focus on multi-family buildings
2.) Rehab other buildings in our portfolio
Ideally we'd love to form a long term relationship with a lender where we could leverage the existing equity in our portfolio to acquire and rehab in a BRRRR type method.
Questions :
1.) Does this sound like a good strategy to quickly and efficiently (low cost) get some cash out of these properties?
2.) Is there any other strategy we should consider that would be faster/less expensive?
3.) How difficult is it to transfer title from LLC 1 to LLC 2 and LLC 3? Is it expensive? Are there any risks associated with doing this? Properties and existing LLC are in Florida.
Thank you in advance for the time and help!