Bought a house in Ohio for Cash under an LLC

Investor · Gardner, MA · Member since 2014 · 10 posts · 1 vote

I closed on my second rental property last month and it was an all cash purchase. It is a SFH, its worth around 50K, and its in Cleveland, Ohio. I purchased it under an LLC and I want to do a cash out refinance to purchase another property. Does anyone know of a local lender that will do a cash out refi for a property in this price range in an LLC? Is this possible?

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Matt Motil

Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes

depends on the lenders. You might have to put it back in your own name to get the loan done and then talk to an attorney about switching it back afterwards.

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Matt Motil
Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
9y
there are some lenders here that will di it depending on the age of the llc and the seasoning of the property. How long has the llc existed?
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David TerbeekPro Member
Property Manager · Cleveland, OH · Member since 2016 · 260 posts · 162 votes
9y
Congrats on your purchase. Please PM for a name of a lender that does some unique financing. As @Matt Motil mentioned, there are some restrictions around seasoning with most lenders.
216-926-2900
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Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
9y
Because the title is vested in an LLC, for a conventional loan you would need to put it in your personal name for 6 months before either Fannie or Freddie would allow you to pull cash out. That would be the same no matter who the lender is.
So, that would leave portfolio as the only option. We have programs that are ok with an LLC, and can usually get around the seasoning issue. However, we do not lend in Ohio.
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Nicholas Abramo
OP
Investor · Gardner, MA · Member since 2014 · 10 posts · 1 vote
9y
@Matt Motil Thank you for your response. The LLC has existed has for a little over a month. Would it matter to these lenders that I am out of state or that this is my first house in Ohio?
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Matt Motil
Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
9y
depends on the lenders. You might have to put it back in your own name to get the loan done and then talk to an attorney about switching it back afterwards.
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Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
9y
Originally posted by @Nicholas Abramo:

I closed on my second rental property last month and it was an all cash purchase. It is a SFH, its worth around 50K, and its in Cleveland, Ohio. I purchased it under an LLC and I want to do a cash out refinance to purchase another property. Does anyone know of a local lender that will do a cash out refi for a property in this price range in an LLC? Is this possible?
When did you buy it? It might be too soon. There are some investor friendly lenders who could help you out in Ohio.
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Percy N.
Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
9y
@Nicholas Abramo, you can look into "delayed financing" which I believe is a Freddie Mac (or is it Fannie Mar?) program. However, they will only allow you to refinance up to the purchase price (cash put in as shown on the HUD-1), not rehab or closing costs.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
Get it out of the LLC otherwise financing will be near impossible at reasonable rates. You LLC is not of any advantage to you and will only complicate your investing plans going forward. All you need to protect yourself and make your life easier is insurance on your investment properties.
Lose the LLC.
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Nicholas Abramo
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Investor · Gardner, MA · Member since 2014 · 10 posts · 1 vote
9y
@Tom Ott Thank you for the response. I have owned the property for a little over a month. I know that some banks require a 6 month seasoning period. Have you seen a bank do a cash out refi for a property in an LLC?
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Vince Lucas
Flipper/Rehabber · Cleveland, OH · Member since 2016 · 133 posts · 69 votes
9y
@Nicholas Abramo There are banks that will do a cash out refi in a llc but not aware of one that will do sub 50k.
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Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
9y
Originally posted by @Nicholas Abramo:

@Tom Ott Thank you for the response. I have owned the property for a little over a month. I know that some banks require a 6 month seasoning period. Have you seen a bank do a cash out refi for a property in an LLC?
I do these all the time. And sub $50K sometimes. But you are not me;) I have a 10+ year working relationship with my lender (a commercial bank) and they work with me on my deals and loans.
In your scenario, I really think you need to talk to a competent loan broker who can put you in a subsidized (e.g. Fannie Mae) loan. They may suggest spinning out the property from your LLC. That is trivial if it is a single member LLC. If it is (SM-LLC), it is a disregarded entity anyway, so it doesn't do much for you.
I would bet most OH commercial lenders would not lend to an out-of-state owner of a free-and-clear property, and if they did, only at 70% of purchase. That's my guess. Some business is just not worth pursuing. I don't know what your balance sheet looks like, but that is your key. And you'll need to be face-to-face to get a loan with a commercial lender. So find a loan broker... good luck.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
9y
@Nicholas Abramo to get it refinanced into your standard 30 year note with low rates you will need to place the property into your personal name. So long as you are not committing any grossly negligent acts and you have a decent insurance policy the risk of owning a small property like this in your own name is very minimal IMO.
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
9y
@Nicholas Abramo
Like a lot of folks are saying, you're going to have to put the property into your name, but you should be able to cash out up to the purchase price on a Fannie Mae product without seasoning. 6 months seasoning is the minimum for cash out over and above the purchase price. The loan amount is too small for any commercial lender I know.
You should set something up with a national credit union (like Navy Federal for instance) if you're going to cross state lines. Local lenders want you to be local and these little loans are what local lenders and credit unions do.
Stephanie
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