LLC Financing

[Robert Delgado]

Hi Everyone. Two friends and I are on the verge of starting a Real Estate Investing business. One of them has a large sum of money to use to buy houses and flip them so it seems that is where we are going to start. However we also want to buy some rental properties. The problem that we are having is we ant to start an LLC and we want to leverage financing for the rental properties. What i have seen online it is all but impossible to take a loan out as an LLC so what are some of our options? Thanks Everyone!

[Mehran K.]

Like @James Syed mentioned above, you won't be getting a conventional 30 year fixed rate mortgage written directly to the LLC. It's actually against the FNMA/FMCC guidelines. There are lenders that will write loans to LLC's, but the loans will be considered commercial/portfolio loans and will have different terms (ARM or balloon payments).

To benefit from conventional 30 year fixed rate mortgages, some people take title to properties in their own name, have the loan written in their own name, then transfer the deed/title to their LLC (while keeping the loan in their personal name) later down the road. It's not illegal but it violates the "Due-On-Sale" clause written into your mortgage. The lender will then have the "option" to call the loan due because of this transfer of interest "event". This is a risk people some people are willing to take! Use the search tool in the top right corner for more information on the DOS clause!