LLC questions - getting mortgages and transferring property in/out

3 Replies

Hi,

I have a few LLC-related questions.

If I own a house with a mortgage, is there any easy way to transfer that house into an LLC?

If I go to a bank for a mortgage on an investment property that I want to purchase, will they underwrite in the name of the LLC using my credit if I'm full owner of the LLC? What about if I'm only part (but majority) owner?

If I'm a partner in an LLC (majority owner), and the LLC owns a house outright (no mortgage), how do I get a bank to give me a mortgage on the house to get some cash out? The house can't come out of the LLC btw because the other partner in the LLC owns 30% and would obviously want to keep the house in the LLC. If I get cash out via mortgage I might decide to leave it in the LLC, or I might decide to take it out of the LLC but that's a separate discussion which would also include how the mortgage is paid in each scenario.

Thanks for any insight/help here - it's a bit confusing.

They might loan on an LLC as long as you personal guarantee the loan. If you are thinking about transferring it to an LLC for asset protection, an LLC will not protect you but a good insurance policy will. Banks might have a clause they can call the loan do if you are trying to hide it in an LLC.


Joe Gore

In my experience, and based on my reading:

-Most banks will not loan on an LLC even with a personal guarantee, unless it's a portfolio lender and loan.

-Banks can technically call the loan if you transfer it into an LLC, but they won't.

The path I am following is typically:

Buy in personal name, rehab, get cash-out loan, convey property to llc.

or

Buy in personal name with purchase loan, convey property to llc

Depending on whether the property is financeable or not at purchase.

@John Pruner doing business (banking) as an LLC is going to be handled by a commercial banker. Not the same person who handles mortgages for homeowners. The rules and procedures are different at different banks/credit unions. Your personal credit will matter at the beginning and you will probably have to personally guarantee your loans. As you establish a credit history for your LLC, your business builds it's own credit rating..

Borrowing on the property owned by the shared LLC should be covered in your operating agreement first to authorize the borrowing/terms. Whether or not a bank will lend to that LLC is a question for your banker.

For the property you have mortgaged in your name, I would kept it adequately insured to protect my assets and only transfer to an LLC when ready to cashout refi after your tenants pay down your note.

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