I'm just looking for a little refinance help. We have a SFR in Atlanta, GA with a loan balance of $140k. It's worth $260k. We have it rented at $1,695 / month on a 2-year lease.
We are looking to refinance, about $180k with long-term debt.
We hold this in a LLC that has financials since 2018.
Anyone have ideas or help?
Thanks in advance!
If you quit claim it back to your personal names, you can refinance it into a Fannie Mae loan at the best cash out refinance rates. Then when you are done, you can quit claim it back to the LLC without violating the due on sale clause, as Fannie changed their rules back in 2016 to
@Kevin Romines Thanks for sharing this. Despite Fannie's guideline, do some conventional lenders originating Fannie loans have clauses within their own set of loan docs which would prohibit this? Just seems like quicken loans would be marketing the heck out of this if they had no problem with it. I'm NMLS licensed as well but really don't do much A Paper other than a lot of the recent refi boom stuff where I haven't ran into this yet. In normal times, I stick to alternatives (commercial, non qm, hard money, portfolio etc).
@Rob Wilcox If a conventional loan is not viable for you at this moment (as is the case for many folks whose employment has been affected by Covid-19) then you may want to look into a commercial/non qm option that has no problem with LLC vesting with or without 2 years of history. These loans aren't backed by GSEs like Fannie/Freddie and instead rely on secondary market investors on Wall St. That being said, rate are higher but entity vesting is no problem, there are zero DTI requirements, no limit on the # of financed properties you own, flexible seasoning requirements, typically don't report to the credit bureaus, etc etc. Instead of your personal income, these loans can rely simply on FICO and subject property cash flow (DSCR). However, like Kevin said, if conventional financing is viable in your scenario, exhaust that first. You could get this done at 70% LTV (or just under) into a 30 year loan and accomplish your goals here based on the rental income and a few assumptions about taxes, insurance, expenses and prevailing DSCR requirements around the market at the moment.
@Alex Bekeza and Kevin, thank you for your knowledge.
Will look into these options.
The one concern I've always had in moving out of the LLC is the potential for personal liability.
Do you know how long this should typically take? Range is fine.
We’ve never wanted to put our personal assets on the line.
Again, very much appreciate your insights.
@Rob Wilcox The loan process? Plus or minus 30 days.
If the concern of moving the asset out f the entity outweighs the better terms you can get, then yes, stick to Non-QM loans which are made to the entity with personal guarantees. This is just an option that can be used.
@Alex Bekeza yes, individual lenders can have overlays that may not allow it, however I have never seen this overlay by any lender, so not saying its not out there, just would be very rare to my knowledge?