Refinancing, partners, L.L.C., and profit distribution

General Real Estate Investing
1

Hello to everyone, I have a question about refinancing, partners and L.L.C., profit distribution. The following example expresses my concerns.

Example: Partners in a L.L.C. acquire property with the intention of rehabilitating the property and selling for a projected profit of $70,000. The partners in the entity decide upon acquistion that they will transfer the property to an L.L.C. The property is now held in the L.L.C. The L.L.C. is structured that each partner will be entitled to 50% of the profits upon sale of the rehabilitated property. The partners in the L.L.C. experience problems with selling the property quickly and decide to perform an 100% refinance.This means that one partner must take the property out of the entity and assume title in his name. One partner is able to perform the 100% refinance. Since the property has not been technically “sold” how can the company pay both investors if the refinance was performed by one partner in the company. Thanks to all for any feedback.

2

huh? you’re making it harder than it is.

find a bank that will do the refi to the LLC with a personal guarantee by the members. that will keep the mortgage in the LLC with the property and eliminate your problems.

I assume that you are going for 100% financing to take out your profits now? You may have to back off to 80% LTV, pull out some cash now and wait until the property sells for the balance.

If you can’t find a banker that will do an 80% LTV to the LLC with personal guarantee, email me.

3

Thanks for the response mcwagner. I will try to investigate lenders or banks that will allow me to refinance and not have to take the property out of the L.L.C. In addition, I appreciate you offering your assistance in the event that I am unable to find a lender or bank that can perform this function. Also, do you know of any lenders/ banks that will perform the refi to the L.L.C. with a personal guarantee by the members? Thanks again for the information.