Personal conventional loan to LLC -Fannie Mae

Member since 2021 · 2 posts · 0 votes

I am a first time home owner . My lender is Fannie Mae. I received a loan for 30 year conventional. I want to rent out my property but first want to transfer it to an LLC. Is this allowed for a personal mortgage loan that was purchased by me?

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Sean Walcott
Member since 2020 · 20 posts · 7 votes
4y
I'm going through the same thing, what I've heard is that you transfer to the LLC and make your payments, the bank rarely checks, if they do though than the loan is due in 30 days. Hoping to hear what others have to say on this? How are people owning 20+ homes do they just go to multifamily?
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Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
4y

@Bella Hounakey and

@Sean Walcott Yes you can do this on the property, it has to be through a third party (I have used some in CA before) and title companies do not do this anymore they use to do it for you. You'll need to email the company/contact the company to give them a heads up on the change (they are fine with it 99% of the time). The other thing is that if you are looking to save money on calling it a primary residence on taxes, that goes away with it being in an LLC and there are some other drawbacks. Talk to your CPA and attorney to make sure you are doing this right even if you are using a little bit of a year as a primary then switching it over to the LLC.
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
4y
@Bella Hounakey any Fannie Mae conventional loan will require one year of occupancy before you can rent the property. Fannie Mae has allowed you to transfer title to an LLC for several years now under certain conditions. The main requirement is that loan holder must remain the majority LLC owner. The loan stays in your personal name, so there is some question if just transferring the title has much effect on liability protection.
@Sean Walcott if the loan is conforming and written after 2016, both Fannie Mae and Freddie Mac will allow transfer to LLC without any due on sale concern. As far as number of loans, you can only have 10 financed properties in your personal name, so anyone with 20 houses is moving to commercial loans. Just be aware that moving title of your property to an LLC has no effect on the property being personally financed. The loan is still in your name. You can own 10 houses with personal mortgages, move them all to LLC and you will still be at your ten financed property limit.
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
4y
Quote from @Peter Mckernan:

@Bella Hounakey and

@Sean Walcott Yes you can do this on the property, it has to be through a third party (I have used some in CA before) and title companies do not do this anymore they use to do it for you. You'll need to email the company/contact the company to give them a heads up on the change (they are fine with it 99% of the time). The other thing is that if you are looking to save money on calling it a primary residence on taxes, that goes away with it being in an LLC and there are some other drawbacks. Talk to your CPA and attorney to make sure you are doing this right even if you are using a little bit of a year as a primary then switching it over to the LLC.
If it is a rental property, you can't claim it as a personal residence anyways, so that is a non issue. As soon as you change the property to a rental, you need to contact your property tax office and label it as non-owner occupied. You also need to contact your insurance agent and change over to a landlord policy.
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