Hi, I have two rental properties in Calfiornia that are held in a LLC that is shared with me and one other partner. I financed both of these properties with traditional 30 year mortgages that I obtained from a bank. Since that time I've been blessed to have accumulated a lot of cash on hand, and am interested in refinancing those properties using my own private money.


The goal being that instead of my cash sitting in an online savings account earning 1% while we pay the bank 5.125%, I would basically become the bank and the LLC would be making payments to me after I pay off the existing loans and issue a new loan from me to the LLC with the property as collateral (i.e. I'd be making 5.125% instead of the bank). This is ok with my partner as he looks at it as if we're already paying the bank 5.125% why not pay it to you instead.

Questions:

1) Are there regulatory requirements I must meet to provide this kind of private loan to a closely held LLC in California?

2)What legal documents would I need to complete this "refinance"?

3)What, if any, documents would I need to generate to track for tax reporting purposes for both myself, and the LLC (e.g. I'd want to track what part of each payment is return of principal vs interest, as I would not want to be taxed on the return of principal to me as it comes back from the LLC through monthly payments, etc...)

4)Other considerations that you think I should be aware of that I haven't mentioned here?

Thanks for all your input!

Mike