I have had the hardest time trying to figure this out and have hit repeated walls -- but this CANNOT be that hard and I am certainly not the first person to do this! Although based on my conversations, it sure feels like I am.

I have a property in a business loan under my LLC -- how do I refinance it into an owner-occupant loan? I am moving into one of my rentals and the terms of my current loan dictate that I can't live there.

What are my options? Who do I talk to? Most of these lenders have not been helpful AT ALL.

Thanks for any advice you may have!

Milwaukee, Wisconsin

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Attorney
Durham, NH

Alex Talcott

Attorney
Durham, NH

Replied Jun 17 2022, 08:16

"It can't possibly be this hard" is an infuriating feeling. "I feel like I'm taking crazy pills!"--Will Ferrell in Zoolander

Most lenders are limited by 1) their products, 2) their non-understanding of what can be done totally compliantly (if they don't have a form for it, they think it's illegal), 3) their unwillingness or inability to talk themselves out of business in the short-term but building their long-term credibility by educating you and pointing you in the right direction. So in my opinion, what you've experienced is a lack of appreciation or non-communication that those individual lender employees are just not financially incentivized to problem-solve with you.

The best bankers and other debt officers are the ones who don't just open whatever account or apply for whatever product you ask for, but who ask about the ends and then reverse-engineer the means.

You're probably best off with a lawyer who won't mind diving into the language of your current business loan instrument. They/we are used to explaining to banks what their job is (I know that sounds so condescending).

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Andrew Postell

Lender

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Lender
Fort Worth, TX

Andrew Postell

Lender

Pro Member

#1 Creative Real Estate Financing Contributor

Lender
Fort Worth, TX

Replied Jun 17 2022, 08:43

@MJ Berst yeah, it's really easy even though some places say that it's hard. You can 100% do this - here's how you do it.

1. You get prequalified with a lender first. Keep in basic when you get prequalified. "I need to get prequalified to purchase a home"....even though you aren't purchasing, it's the same numbers as the refinance. They might ask for 5% down or 3.5% down to get you prequalified. Hopefully you have that amount to allow even the most basic of lenders to just prequalify you. If they issue you a prequalification letter, then you should be ok to get the loan.

2. Move into the property. I want you to move in, change your addresses on your license, place of work, bank statements, etc. All of those things we would do when we change our addresses. In my state we even declare with the state our intent to "homestead" the property. Don't know if your state has anything like that but do everything you can to get those addresses updated right away. Oh, and do it in 24 hours. The way everything is now you can do ALL of this online.

3. Then go back to that lender that prequalified you and say "Hey, I changed my mind, I just want to refinance my residence". It will take 45-60 days to refinance right now (maybe not, but I want you to assume that) and that's it. You don't ask permission from your current lender or anything like that. You just do it and make sure you are in process right away with that refinance.

Now, some of this is predicated on knowing good lenders. I want you to get used to leaning on other real estate investors for your vendors/contractors/lenders because a fellow investor probably has already gone through some of this to find a good referral for you to use. So lean on OTHER people to get in front of good vendors. I wrote an entire post on this topic that you can HERE.

Hope this helps in some way. Thanks!

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