I'm an out of state investor about to close my first property in Omaha, NE. My lender has asked if I want to purchase the property under my name or an LLC, which will determine the loan terms. From my understanding if I purchase in my personal name, I can get a residential loan as opposed to commercial. Does anyone have advice/experience closing in their personal name and quit claiming the property into an LLC shortly after? Is it higher risk and is there any reason I wouldn't want to do this?
This is a buy and hold property and I plan on staying in it for at least 3-5 years.
If you take personal financing and the deed personally, you will get a lower interest rate, but the loan will show up on your personal credit report. You also open yourself up to personal liability issues in the event of a lawsuit. When you try to Quitclaim the deed into your LLC, you will breach the mortgage clause referencing Due On Sale and the lender then has a right to call the loan due and payable in full. Also, the quitclaim deed may void the title insurance policy that you got at closing. Furthermore, unless you set up the property insurance correctly, you could end up without coverage in the event of a claim if the property is deeded in the LLC and insured personally.
@Tom Donnelly , call access bank in Omaha. I just talked to a loan officer there and they have no problem with you getting the loan in your name and then quit claiming it down the road.
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