Buying a home with a personal loan from your own LLC?

Question

Hi,

I was wondering if you could get a construction loan with an LLC. Build a home and then purchase that product with a personal conventional or FHA loan?

Connor Castillo · Answer

@Kevin Sobilo I am not well verse in financing options, so I am probably over complicating this. I will give you the exact scenario that I am working with.

I would like to purchase land for 90 K cash. Take out a loan to build 4 homes on the property. Then use a multifamily FHA loan to pay off the loan I used to build the homes to hopefully lock in a better rate. My family and I would live in one of the units in order to be able to do this, and there would be an additional 3 units in order to get the full amount of the FHA loan.

Like I said, I am probably way over thinking this, and this is probably not even possible, but I appreciate any advice.

Katherine Blazer · Answer

You would need to talk to the lender you choose to work with. Most likely, it would be considered a refinance transferring it into your personal name. So to complete a cashout refinance would be 6 months with some non-qm banks if you can find it or a year with conventional. There are construction loans out there for primary builds.

Jacob Sherman · Answer

Agreed with it being a non arms length . If you're buying for personal and doing construction can get a 203k loan from the FHA

Kevin Sobilo · Answer

@Connor Castillo, I don't think your question quite makes sense and also I'm not sure what your reasoning is for this plan.

1. The title of the post says "personal loan from your own LLC", but the post itself describes using a "construction loan". A personal loan is an unsecured loan with no lien against the property. A construction loan is a secured loan with a lien against the property.

Also, almost any kind of loan to an LLC whose business is real estate investment will need to be guaranteed by you anyways.

2. Purchasing a property from your LLC would I believe be considered a non arms length transaction and could affect how loan products work. Here is a link that describes that issue in part.

https://www.rocketmortgage.com/learn/fha-identity-of-interes...

If this is meant to be your primary residence, why not deed the lot over to into your name and do everything in your own name? What is your purpose for trying to make this more complicated plan?