Question about due on sale clause?

[Pat Jackson]

I know this is talked about a lot, my question is a little different.

I'm in the process of setting up a Series LLC to protect myself. I'm working with a particular lender that is very investor friendly. I'm preapproved, and discussed my plans of buying up to 10 1-4 unit properties. According to them, my w2 income, credit score, and DTI are all good to go. After owning a property for 1-2 months and having it rented, they'll use rent check receipts as income and allow me to have another mortgage. The paperwork is a little more complicated, but you get the gist.

I'm planning on financing these in my own name, the moving them over to the LLC. I'm not worried about them calling the "due on sale" clause. What I am worried about is after I finance a property and move it over to the LLC, then go to do it again, they'll be like "hey, no more mortgages for you since you're going to keep transferring them to the LLC". And I don't want to ask the lender for fear they won't issue me a mortgage at all (maybe that's a bit extreme).

In short, does anyone have an opinion or experience on what lenders will do if you continue to use them but are constantly moving properties out of your name into a LLC?

[Tom Gimer]

@Hunter Sandlin The only benefit to having more than 1 name on the Note would be to the lender. Every person or entity that executes the Note would be jointly and severally liable for the entire obligation. In other words, the bank would not have to try to collect 1/3 of the funds from each of 3 borrowers... they could go after whoever has money for the full amount. 

In your example I assume there is an LLC with limited assets and a person with assets (accounts, a job, etc.) Bank would follow the money.