REFINANCING on an LLC?

Question

We have a rental property in Indiana that we purchased with cash in our LLC about 5 months ago.  I did not know that I would not be able to refinance this property easily without it being in a private name as opposed to the LLC.   We want to refinance and pull out cash since we put money into the property and it is now stable.   Any suggestions?

Azeez K. · Answer

Hi Account Closed

I share your pain and completely  understand what you are talking about. There are banks (example WellsFargo/BBT) that offer refinance under an LLC.

(PS BP Admin I am not affiliated  with the banks nor I am advertising  for them and don't benefit in any way)

The problem is that these banks charge high interest rates 5-6% for WF and 6%+ on BBT. You can certainly refinance but have to figure  out the cost of finance vs. cash flow  etc.

Here  are some  tips:

1. Talk to some MF brokers and ask them what banks/contacts they use and speak to the individual (most likely they would refinance under an LLC or can point you in the right direction)

2. At banks talk to a Small Business Loan's person who may be able to point you the right person

Typically, its a little bit more challenging if your rental is a Single Family Residence vs. MF. Again if its a MF with 4 units or less you may still run into some challenges. However, if it is more than 5+ units then its much easier.

In short you can certainly assign under an LLC and I am confident there are plenty of options. However, the cost and hassle factor is high.

Hope this helps!

Michael Leffelholz · Answer

Account Closed You can find lenders who will refi loan to LLC but you really should focus on small community banks or as others have suggested perhaps local credit unions. Generally terms will be a bit more stringent. My partner and I bought property all cash. After completing some improvements we deeded to an LLC and were able to refinance and recoup some of our initial equity. Best of luck.

Michael

Alexander Felice · Answer

Agree with Amy. you shouldn't call 2, you should get a list of all the banks in the surrounding 30 minute drive time and call ALL. OF. THEM.

if you don't call them all, every last one, you don't know what the best terms and conditions for lending are. Also, network with bankers! You can get a lot further by having someone you know pushing for you rather than just blind calling and hoping.

Amy E. · Answer

Two banks is not enough....I went through 7 before I found one.....

Pamela Starnes · Answer

Account Closed......Hi Jeannie, just wondering how the refinancing situation worked out for you.  I am looking through the posts to see how this situation works/worked out for others as I am looking to do the same in the near future.  Thanks!

Account Closed · Answer

It is only a duplex.  I may be making some headway now...   Credit unions seem to be the way to go.  I also have voice mails into multiple non conforming lenders.   It will work out.   Just need to keep plugging away.

Account Closed · Answer

Thanks to all...  I will definitely spend more time looking at various lenders.   I am not easily discouraged.

Account Closed · Answer

I have reached out to two local lenders and have had the same response on both, which is that we have to hold outside of an LLC for 6 months first.  Clearly we did this backwards.   Should have held in our names first then migrate over to the LLC after the refi.  Live and learn.  I will try credit unions though.  Thanks for that.

Doug O. · Answer

How many units is the property? That will make a difference with most lenders as well. over 4 units and it would be strictly commercial lending.

I just closed on a cash out refi last week on a property (that was about 8 months in the making with a local lender) also held in an LLC. It was a painful process now with all the changes in commercial financing with the banks. They were only willing to go up to 60% LTV (which wasn't an issue for me), and there were all kinds of hoops to jump through. Have you tried PNC? Not sure if they lend in that area, but if they do, I found them easiest to work with. Of course, YMMV, but worth a shot.

REFINANCING on an LLC?

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