Buying a property as an LLC?

[Christopher Davis]

I've read that it is wise to buy investment properties as an LLC to protect yourself personally, but I've also heard that banks won't lend to an LLC buyer. Catch-22? How do you do that if banks won't lend?

If you buy and then transfer, the bank may call the note, so again how do you do this?

Thank you

[Scott Smith]

There are some banks who will lend to LLCs, but it can take talking to a few lenders before finding one. The only issue with lending is that you face higher interest rates on a commercial loan, as you mentioned. The best strategy I have seen to navigate your issue is to implement a land trust. While you can transfer the property into an LLC, you can transfer the property into a Land Trust because it is considered an estate planning tool and protected by the St Germain Act. Once you transfer it into the Land Trust you can assign the LLC as the beneficiary to retain the liability protection.

This way you have access to the beneficial financing options available in your personal name, the protection of the LLC, have entities that will easily integrate with future estate planning, and you can even introduce anonymity into your asset protection strategy.