Question about cash purchase through LLC for a no seasoning REFI
7 Replies
Dave DeMarco
Rental Property Investor from Pittsboro, NC
posted over 3 years ago
I recently read on the forum that if you purchase a property for cash through an LLC by lending yourself the money (draw up a mortgage note and file it) that you can REFI out of it with no seasoning and recover your cash. I wanted to verify that this is indeed the case and connect with someone who has actually completed the process. I have an equity line I would like to use to make the purchase and pay the equity line back immediately.
Thanks in advance for any help.
Jason Sullivan
from Glendale, Arizona
replied over 3 years ago
@Andrew Postell has a great post about this. I think it will help you out. https://www.biggerpockets.com/forums/48/topics/460...
Dave DeMarco
Rental Property Investor from Pittsboro, NC
replied over 3 years ago
@Andrew Postell @Jason Sullivan Thanks Jason, I saw that post. I was looking for someone who has actually used this method. Have you used it?
Andrew Postell
Lender from Fort Worth, TX
replied over 3 years ago
@Dave DeMarco while your scenario does happen often it is more rare than just the buying and refinancing of investment properties. I've had a handful of people in my personal network you use this so I can talk you through what happened what to look for etc. if you would like. Thanks!
Dave DeMarco
Rental Property Investor from Pittsboro, NC
replied over 3 years ago
Thanks Andrew, I'll call later this week.
Dave DeMarco
Rental Property Investor from Pittsboro, NC
replied over 3 years ago
Update
LLC is in place and closing on a rental property in Tennessee on 12/27/2017. I've had the title company prep the note for the loan from my LLC to me, and the deed will be filed at close showing the loan. I have a lender that I have just submitted documents to for the REFI.
Truth be told - I'm nervous.
Does anyone have a referral to a bank that they have closed with using this method? I would like to have a backup in place.
Here is the link to what I'm trying to accomplish
https://www.biggerpockets.com/forums/48/topics/460294-how-to-cash-out-1-4-unit-property?page=1#p3097855
Eric Saavedra
replied over 2 years ago
Dave, did you ever get refinanced without a problem? Im looking into doing this and setting up an LLC right now. Still trying to figure how to go about doing that first.
Dave DeMarco
Rental Property Investor from Pittsboro, NC
replied over 2 years ago
@Eric Saavedra Hi Eric - I wound up not needing to use this method and I'm glad I didn't. I just paid cash and the took out a HELOC. When you pay cash there is no seasoning requirement to do the HELOC. It also saved me A TON of money in closing costs. I refinanced with Penfed Credit Union immediately and had my money back in about 30 - 40 days. I bought another property immediately and repeated the process. I have offers out on 2 properties right now.
PenFed will cost a few hundred dollars in closing costs vs a few thousand. 80% LTV on NOO. They have a minimum loan amount of 10k and will let you do interest only payments. They also will do a desktop appraisal I'm many cases. If I would have done the loan the way I intended when I wrote this post I would not have been able to scale so quickly. The only downside with Penfed is they will limit the number of loans you can do with them 3 NOO plus your primary residence.
Feel free to PM me with any questions and happy investing!