Forming LLC for Hard Money Borrowing

[Account Closed]

Hello all,

I am looking to do my first BRRRR investment and the plan is to use a HML to fun most of the purchase + rehab. Of all the HMLs that I've spoken to, they all require a business entity to be formed. I understand this is due to Dodd-Frank restrictions, etc. After the rehab and seasoning period is over, what is the best way to refi under a conventional mortgage? I know most conventional lenders won't lend to an entity so what should be done to make this all work?

I haven’t found this exact topic in the forums but if anyone knows of one, please point me there.

Thanks in advance!

[Kevin Romines]

The best game plan is to start having conversations with a Banker or Broker to do a Fannie Mae cash out refinance to get your original investment money back out so you can rinse and repeat. 

You will need to transfer title of the property out of the LLC into your personal name prior to the lender ordering the appraisal. Once you have completed the refinance into the Fannie Mae loan, Fannie Mae allows you to transfer title back to the LLC so long as the borrowers on the loan are the majority members of the LLC. Fannie Mae changed that rule about 2 years ago. This will no longer trigger the due on sale clause by doing this?

Happy investing!!!