Cash out refinance for LLC owned property
Hello BP. I would like some advice on securing loans in the name of a LLC. I currently hold a property in Philadelphia. Property is owned outright in a LLC, valued around 180k and occupied with a paying tenant. I am willing to use my personal name and income to "guarantee" the loan. So far, two lenders has asked me to transfer title to my personal name, which is not my end objective.
1) Since the property is in a LLC, do I have to go for commercial loan?
2) What are the typical interest rates? (750 credit score, Reasonable debt to income ratio). I am getting offered around 6.25% for 30 yr fixed from local broker.
3) Should I wait until I own more properties (free and clear) under the LLC and apply for a portfolio loan? How many units do you need for it to become a portfolio? Would the rates be more competitive then?
4) Should I purchase properties in my own name in order to secure conventional financing, and then transfer title to LLC via Trusts?
Any feedback or links to relevant discussions would be greatly appreciated!
@Alyn Shek
The lender charged me 0.5% points on both properties along with the typical transfer fees.
Following this thread, great information.
That’s awesome that you found a local bank willing to make that deal.
I’m trying to create a plan as well. Just to fully understand... Are you planning to refinance at the end of the 10 years with another lender?
That will have to be part of my exit strategy.
My plan is to leverage all my properties to the neck for the first 5 years. This way I can have maximum funding to scale and grow my portfolio. Since my original post 11 months ago, I am now at 13 units across 8 properties! Starting at year 6, I will slow down on acquisition and start pouring available cash flow back into the 1st mortgage. Snowball that into the 2nd and 3rd and so on.
Hopefully, by year 10 I will have paid off a significant portion if not all of the mortgage principles for the increase in interest rates to be negligible. If this is not the case by year 9, I will have to look into potential refi with a new loan or selling and exiting altogether is the market is up.
Update on my loans: The lender I found in my previous post has recently stopped writing portfolio loans for LLCs. I had to go to commercial for my 4th loan. This did not affect me too much besides that the rate went up by 1-1.25% compared to my other loans. The rate is still competitive since I already built a relationship with the bank.
@Jimmy Lin do you recommend the portfolio lenders that you had used for the previous 3 properties?
I would recommend them. I used them for my recent primary home purchase as well. They don't have all the bells and whistles the big banks have like mobile banking and their online banking registration is cumbersome. But they have competitive rates and are investor friendly.
For anyone that is looking for a lender. S$T Bank is the lender I used.
@Jimmy Lin
Hi Jimmy,
I was in the process of doing a cash out refinance for a rental in philly that's in my LLC...Bank just informed me that I would need to transfer out of my LLC to my personal name. If you don't mind sharing the name of the lender you met. I would like to reach out.
Thank you,
Theresa
@Theresa Whiting
Katie Rittel was my banker. However, the bank went through a policy change at the end of 2019 and they now refer all LLCs to apply for commercial loan.
Commercial loans will have a higher interest rate as well as a shorter loan term.
check out this company, I think they do cash out refis in an LLC using rental income to qualify the property kram capital https://kramcapital.com/Criter...
"The Airbnb market presents a lucrative opportunity for investors. The number of short-term rentals has increased by 105% in the last three years, and in some cities, investors are making almost $7,000 per month on just one property.
The only catch? Qualifying for a traditional mortgage on these ventures can be difficult. Without a lease in place or proof of the property’s annualized income, most lenders won’t finance a rental — leaving investors like you scrambling for funds.
Luckily, we’re not like other lenders. We know how to assess the viability of a short-term rental property, and we offer dedicated financing for just such investments. We make commercial lending easy, letting you find the true potential of Airbnb and short-term rentals."
Just got off the phone with this company, they do cash out refinancing in an LLC, 30 year loan terms, will use rental income to qualify, no prepayment penalties for investment properties at this time, 20% equity 80% debt. Rates are prime or slightly higher with great credit. can close in 30 days.
50 states lender Fairway
Quote from @Jimmy Lin:How many properties do you need to get a portfolio loan and which sort of banks let you hold a title in my LLC while giving you rates that are not in the commercial loan ranges? Really trying to figure this out right now
Thank you @John Kwon.
Update: I went to a real estate meet up, and got convinced to sign up for a 3 day seminar. The seminar was very educational, especially for a new investor. I practically jumped out of the chair when they brought in a mortgage lender from a local bank as a guest speaker. The lender is specialized in working with investors. Needless to say, I jumped on the opportunity! We are now in the process of closing two portfolio loans, 10/1 ARM amortized on 30 years with 4.25% interest. And no, they had no issues with me holding title in my LLC!!