Hello Desperado,
What you are doing is common among the investors I work with.
They purchase properties below market value, fix up if needed, then do a cash out refinance. What most mortgage brokers run into problems with is the inexperience in working with “No Seasoning” of title. To take out a loan of 100% fo the equity would require a nonconventional loan. Most of these lenders have guidelines that say you must be on title for at least 6-12 months. There are several though that can refinance you immediately.
If you are looking to purchase the property in the name of a LLC you will need to get financing through your local bank. However, they will not finance 100% of the appraised value. Possibly 80% and they may have their own set of seasoning guidelines.
Now as far as titling the property into an LLC. This can become very tricky. I do recommend that you speak to a real estate attorney in your state as legal issues will vary.
If after refinancing the property in your individual name, you then transfer to a LLC, this could trigger the “Due on Sales Clause” This means if the lender finds out, they could require the entire balance to be paid off in 30 days. Many investors do not care as they will chance this. Not many lenders currently are looking for these title changes. As interest rates rise you may see lenders be more aggresive so that clients are forced to refi. I suggest you research LLC in the “asset protection, legal” threads.
Some mortgage consultants have made arrangements with lenders to allow investors to title into a LLC at closing - for purchases or refinancing. Thus they do not have to worry about quit claiming and triggering a due on sales clause.
I will explain what several of my clients do though. They use a land trust. A land trust will be set up after closing on the refi with you as the beneficiary. When sent to your lender for review they generally have no issues as long as you are the beneficiary. After they have reviewed my clients then assign the beneficiary to their LLC. The assignment is an unrecorded document so only the investor is aware of the change. These land trust may not be effective or legal in all states and they will cost more to set up.
To address your concerns about how many properties to put into each LLC. I have heard from several investors that they hold 1 property in each LLC. This can run up quite a bill so others may add 2 or 3. Some do not even set up a LLCs till they have multipe properties or $500,000 -$1M in equity. They get umbrella insurance policies instead.
If you are looking to purchase multiple properties then getting them out of your individual name may become neccessary. As I mentioned before, once the LTVs are down to 75-80% you can take then to a bank to get financing.
With each property you purchase under market value, you can leverage to the max.
I would advise to consider this move closely as your cash flow on the property may be minimal if not negative. Most of the clients I work with refi at 80-90%. It’s really all about buying the property right.
Sorry to hear that your mortgage consultant does not not understand investments. Putting the right person on your team for that role will be very important.