Real estate purchased in LLC's
Has anyone brought real estate in Illinois using a LLC? What was the process? Was it hard obtaining financing from the bank? What banks in Illinois offer mortgages to newly established LLC's?
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@Erika Wilson In my experience financing with an LLC has broken down to two scenarios.
- If you want to take advantage of the great 30yr amortized conventional loans you'll need to buy in your personal name and then quit claim the property to your LLC after closing. We purchased our first 7 homes in our name and then later transferred the ownership to our LLC. The concern here is the due on sale clause that could be called when the bank sees the transfer of ownership. I didn't have an issue with that, but I know it's always pointed out as a concern.
- The other scenario would be to switch to commercial lending right off the bat. It's going to be much friendlier towards working with your LLC, and overall just an easier acquisition process. What you sacrifice typically is you end up with a slightly higher interest rate and an ARM. However, we found the switch to be very advantageous for our business.
I invest in Rockford IL and would be happy to connect you with a few different commercial lenders if that would be of help.
- Justin Sheley