BRRRR Refi help needed - seasoning issue from LLC to Personal

7 Replies

Hi All,

I am trying to BRRRR and I am getting stuck on the refi part. I used LendingHome, a hard money lender, to do the rehab. They make you initial close in an LLC. For the post rehab/rented out/taking cash out part, lenders want to close in my personal name. Not really a problem, but I am running into seasoning issues. Wells Fargo will apparently do HELOC's for investors, but will only use the post-rehab/new value after 12 months. TD Bank will perhaps do it, but I don't think they service Chicago. Huntington Bank is having a hard time going from LLC to personal (which they require) for less than 6 months seasoning.

Anybody have an out here? What am I missing?

I would be happy with either a cash-out refi or a HELOC.

@Derek Walvoord  

Hi Derek - The issue here is you are trying to get a conventional loan for an asset that is owned by a company. From my experiance they don't go together. It's like trying to put a round peg in a square hole.

since it sounds like you've run out of time or getting close to it with your hard money loan... I would reach out to local commercial banks to obtain a commercial loan on your property. You will pay a higher interest rate and a shorter term but you shouldn't have to season it at all.

When using the BRRRR if you want a conventional loan you "MUST" purchase the property in your own name from day 1. That's when the clock starts ticking on the 6mo seasoning period. This is what I do then you can put the property in an LLC down the road once you have the refi loan. I use hard money as well and they do not require me to put the property in an LLC. Find a new money lender.

All conventional loans that are cash out will require you to be on title for 6 months or more. A rate and term can be done less than 6 months. You wont qualify for delayed financing which allows cash out up to the full purchase price + plus closing costs on the refi, because you had a mortgage on the property. Delayed financing is only allowed when you paid cash for the property. 

Other then that, maybe a portfolio loan at a local community bank will get you the cash you need without requiring the seasoning on title? 

@Aaron Cullen if you don't mind my asking, who are you using for hard money? I have not found a HML that will loan without an LLC.

@Derek Walvoord , I have a local credit union that will cash out refi a property in an LLC so you just have to keep looking. Your best bet is to look locally.

@Jason DiClemente look up Marshall Reddick in Newport Ca. they have a lending division. They are local so not sure they would lend to just anyone across the nation but they are great to work with. I have a few others I've talked with as well that will loan with the property in personal name.

Is your credit union giving you a conventional loan with the LLC as the owner? If so that's awesome and haven't found that. Another reason to work with local banks. With most banks that will not be the case.

@Aaron Cullen I'll look into that but I'm in Pa. so chances are if they do t lend nationally, they won't lend on the other coast. My credit union will do a 15 year fixed or a 7/1 arm @ 25 year amortization, both at 4.75%. Not quite as good as a conventional residential but it works for me.

Thank you all. Yes, my Hard Money Lender wanted me to close in an LLC, which was fine, but then the seasoning issue is there. In the past, since I am the only member of my LLC, I have been able to close these loans with a Letter of Explanation.

I will have to see if my HML will let me close in my name. I kind of think not.

Thanks all!

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