Financing option if closing in real estate privacy trust?

Question

Has anyone had success securing conventional financing and closing in the name of a real estate privacy trust that has an LLC listed as the beneficiary? (different than closing in a personal revocable trust where you are listed as the beneficiary)

Working with Nevada Corporate Headquarters and would prefer to close in the name of the trust but seems like we might need a DSCR loan to that if we want the LLC listed in as the beneficiary?

Bryan Maddex · Answer

There are a handful of NonQM lenders that will allow you to close in a trust, but I have not tried to close in a trust with an LLC named as beneficiary. Would need to send that to a few lenders to test it out!

G. Brian Davis · Answer

From my experience, conventional lenders would usually be hesitant to lend directly to a trust with an LLC as beneficiary. DSCR or non-recourse loans tend to be the smoother route, since they focus on the property’s cash flow rather than personal credit, which aligns with holding through an LLC-trust structure. It’s worth running the structure by a few lenders upfront to confirm their appetite before committing.

Mike Grudzien · Answer

This is a tough one...

Steven Lee · Answer

Hi Laura,

DSCR loans are business purpose and not a not a conventional product loan. Any underwriter from a conventional lender will question and red flag the structure. I agree with Jonathan.

Jonathan Lee · Answer

Hi Laura,

I’ve seen this become difficult on conventional loans. Most agency/conventional lenders are okay with a revocable trust where the individual borrower is the beneficiary, but once an LLC is the beneficiary of the trust, many lenders start viewing it more like an entity transaction rather than traditional consumer financing.

In a lot of cases, if the LLC is remaining as the beneficiary, DSCR or other non-QM/investor products end up being the easier route. Some lenders may allow vesting into a trust with additional review, but the LLC beneficiary structure is usually where conventional guidelines become restrictive.