Author Topic: Tapping equity from property owned by multi member LLC  (Read 1632 times)

Janson

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Tapping equity from property owned by multi member LLC
« on: August 09, 2016, 09:05:33 AM »
Hello all,

I'm pretty sure this question is going end with "talk to your lawyer" but I'd still like to get some opinions.

My wife and I are members of an LLC with one additional member that purchased a duplex with cash contributed by the members. Is there any way to use the equity of the property with the ownership being the LLC? At least one person has told me that since it's a multi member LLC that a home equity loan is not an option.

Thanks for the opinions!

slugsworth

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Re: Tapping equity from property owned by multi member LLC
« Reply #1 on: August 15, 2016, 10:05:19 PM »
There aren't universal rules here, read your operating agreement, or sell your interest to another member of the LLC or outside party.

Also talk to your lawyer :)

chesebert

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Re: Tapping equity from property owned by multi member LLC
« Reply #2 on: August 15, 2016, 10:17:36 PM »
Read the agreement

Talk to your partner

Talk to a bank and/or

Talk to your lawyer

Depending on if you want to cash out, all members want to take a bit off the top or the LLC needs some liquidity/cash, you may need to consider different issues.

Fishindude

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Re: Tapping equity from property owned by multi member LLC
« Reply #3 on: August 16, 2016, 06:08:20 AM »
I'm guessing the only way to get $$ out of that deal is to sell your ownership to the other partner(s), or the group all sells out.

Chiron

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Re: Tapping equity from property owned by multi member LLC
« Reply #4 on: August 16, 2016, 09:40:04 AM »
Hello all,

I'm pretty sure this question is going end with "talk to your lawyer" but I'd still like to get some opinions.

My wife and I are members of an LLC with one additional member that purchased a duplex with cash contributed by the members. Is there any way to use the equity of the property with the ownership being the LLC? At least one person has told me that since it's a multi member LLC that a home equity loan is not an option.

Thanks for the opinions!

This will be difficult unless you have a good relationship with a local bank.  Others have suggested selling your LLC interest, but I don't understand that to be your goal.  Talk to local banks/CUs and see what they can do for you.

jwright

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Re: Tapping equity from property owned by multi member LLC
« Reply #5 on: August 16, 2016, 10:43:44 AM »
You could refinance the property based on a current appraisal; if it has appreciated you could all take money out.

Generally speaking, each member will want to take out their pro-rata share.

NoNonsenseLandlord

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Re: Tapping equity from property owned by multi member LLC
« Reply #6 on: August 25, 2016, 06:09:10 AM »
Once a property is owned by an LLC, refinancing becomes more difficult.  A commercial loan is the most likely source of funds.

If only you need the money, not the other member, will the other member want you to take a loan out and potentially put the property in foreclosure?

Janson

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Re: Tapping equity from property owned by multi member LLC
« Reply #7 on: August 25, 2016, 07:18:50 AM »
Quote
If only you need the money, not the other member, will the other member want you to take a loan out and potentially put the property in foreclosure?

I have authorization from the other members. It's not that I personally need the money. The house is fully paid off and we'd like to use the equity to purchase another house.

Chiron

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Re: Tapping equity from property owned by multi member LLC
« Reply #8 on: August 25, 2016, 03:25:49 PM »
Quote
If only you need the money, not the other member, will the other member want you to take a loan out and potentially put the property in foreclosure?

I have authorization from the other members. It's not that I personally need the money. The house is fully paid off and we'd like to use the equity to purchase another house.

Two options to do this:

1. Cash-out refinance. As mentioned, this is difficult with commercial loans.
2. Line of credit to new mortgage program.  If your property is owned free and clear, you might be able to get a line of credit secured by a first lien on your duplex. 

In either case, talk to a local bank familiar with investor needs.