HELOC to refi Single Family Home

3 Replies

I am new to real estate investing and to bigger pockets. My apologies if this has been covered. I currently own 2 investment properties both SFH. One is owned free and clear the other has a mortgage. My financial advisor advised I set up an LLC for my investment properties which I have done. Now I am having trouble moving the mortgaged property into the LLC because of a due on sale clause. The house that I own free and clear I am planning on taking a HELOC (preferably a fixed-rate?) out on to pay off the mortgage of the other house. I say HELOC because currently it looks like I can get a better interest rate than with a mortgage. The property that will be collateral is currently for sale, and been on market for 122 days. I plan on taking this property off the market and putting a renter in for 1 year lease. After the HELOC has been issued I'll put the house back up on the market. This way I'll be able to move my mortgaged property, now owned outright, into the LLC. Make a little more off the rent of that property and turn the property I had free and clear in to a income generating property instead of sitting empty on the market. Will this work? Am I missing something?

Originally posted by @Hank Allen :

I am new to real estate investing and to bigger pockets. My apologies if this has been covered. I currently own 2 investment properties both SFH. One is owned free and clear the other has a mortgage. My financial advisor advised I set up an LLC for my investment properties which I have done. Now I am having trouble moving the mortgaged property into the LLC because of a due on sale clause. The house that I own free and clear I am planning on taking a HELOC (preferably a fixed-rate?) out on to pay off the mortgage of the other house. I say HELOC because currently it looks like I can get a better interest rate than with a mortgage. The property that will be collateral is currently for sale, and been on market for 122 days. I plan on taking this property off the market and putting a renter in for 1 year lease. After the HELOC has been issued I'll put the house back up on the market. This way I'll be able to move my mortgaged property, now owned outright, into the LLC. Make a little more off the rent of that property and turn the property I had free and clear in to a income generating property instead of sitting empty on the market. Will this work? Am I missing something?

If you are selling why refinance? just to move it to an LLC? It doesn't make sense its waste of time and money. Does your financial advisor know real estate investing? or just sells insurance products?

FA is 100% fiduciary only, never tried to sell me any insurance. The house that's for sell Is currently free and clear. I want the HELOC on that house, and use the line to payoff the mortgage of the other house so I'm not bound to the due on sale. The one that is for sale no problem putting it in LLC other than its in another state. I own it free and clear

Hank,

You can convey title to your LLC with little worry about "due on sale clause" (I am not an attorney) as long as you continue to pay the mortgage the lender probably won't care. We have done this several times via a "Quit Claim Deed" . This gets your name out of the public eye and provides some level of asset protection.

No issues at all ,the challenge that we encountered was when we went to refinance, we had to reverse the process in order to satisfy the title company. We are members of the LLC and still personally liable for the loan. But we had to have the title in our names to execute the refi