Cash out loans on rental house held in LLC

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Cash out loans on rental house held in LLC

Brian Knotts
Rental Property Investor · Lexington/Columbia, SC · Member since 2015 · 1 post · 0 votes

Hello all. I tried to get a 30yr "cash out" loan on a rental house I owned for outright in my LLC (for over a yr).... Toward the end of the loan process i was notified the loan was dead since I had not owned the house in my personal name for the last 6mo.

I was able to find non-goverment backed loans for this but only at a 15 yr term.  Terms of 15yr don't allow for adequate cash flow.

Does anyone know of a way to get a 30yr term without this 6mo seasoning period.  I'm reluctant to put this rental in my personal name due to liability reasons.

Thanks in advance...  Brian

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Kevin Romines
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
8y

You can have a lender that does Fannie Mae loans look at the deal from a Delayed financing stand point. Which means you have no mortgage or liens on the property and it's held in an LLC that you own 100% of. If it fits that criteria, you can still get Fannie Mae Delayed Financing on the property up to the max. of your original purchase price + closing costs, on a 30 year mortgage.

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  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y
    Originally posted by @Brian Knotts:

    Hello all. I tried to get a 30yr "cash out" loan on a rental house I owned for outright in my LLC (for over a yr).... Toward the end of the loan process i was notified the loan was dead since I had not owned the house in my personal name for the last 6mo.

    I was able to find non-goverment backed loans for this but only at a 15 yr term.  Terms of 15yr don't allow for adequate cash flow.

    Does anyone know of a way to get a 30yr term without this 6mo seasoning period.  I'm reluctant to put this rental in my personal name due to liability reasons.

    Thanks in advance...  Brian

    That is a freddie/fannie guideline, loans in your name can only be made to properties in your name. The only way to loan on a property held by a LLC is to do commercial loans, which are typically 5 year balloons

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  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    8y

    You're not likely to find a fixed 30-year term loan for a residential property held in a LLC. That's one of the drawbacks when you hold title in a LLC - you get slightly less favorable loan terms.

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  • Kevin Romines
    Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
    8y

    You can have a lender that does Fannie Mae loans look at the deal from a Delayed financing stand point. Which means you have no mortgage or liens on the property and it's held in an LLC that you own 100% of. If it fits that criteria, you can still get Fannie Mae Delayed Financing on the property up to the max. of your original purchase price + closing costs, on a 30 year mortgage.

    2Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    8y
    Originally posted by @Kevin Romines:

    You can have a lender that does Fannie Mae loans look at the deal from a Delayed financing stand point. Which means you have no mortgage or liens on the property and it's held in an LLC that you own 100% of. If it fits that criteria, you can still get Fannie Mae Delayed Financing on the property up to the max. of your original purchase price + closing costs, on a 30 year mortgage.

     The OP said he's owned the house for over a year, so he's past the six month window for Delayed Financing.

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  • Kevin Romines
    Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
    8y

    @Kyle J. The bigger point is that Fannie Mae considers anything owned in an LLC that is 100% owned by the borrower to be a pass through entity and therefore owned personally. So I would have conversations with various lenders that do a number of the Delayed Financing loans to see if they will count the ownership as personal and therefore allow a cash out refinance in that persons personal name. Yes, title will need to be transferred as part of that, but lenders that don't have overlays in this area, might be able to get this done.

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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    8y
    You would need to look for a portfolio lender. Try smaller community banks or credit unions.
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  • Ryan O'Mara
    Financial Advisor · Des Moines, IA · Member since 2017 · 173 posts · 58 votes
    8y

    @Brian Knotts - I have two different lenders who loan to LLC's for 1-4 unit NOO homes and offer a full 30 year fixed loan option. PM me for more info.

    2Reply
  • Robert Naini
    Crestview, FL · Member since 2017 · 25 posts · 13 votes
    8y

    @Ryan O'Mara - This message was great to see, I'll PM you

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