From Personal loans to LLC financing

6 Replies

I am about to finance my fourth rental property using the BRRR strategy and then my bank will not lend to me anymore, hitting the magical fourth loan. My loan officer suggested creating an LLC and buying houses under the company name and using me as the personal guarantor, thus allowing me to own/control four more. Does this sound legit, is this a real possibility? Haven't heard of this potential strategy before. Can anyone explain whether this is viable or not? Thanks!

You're ahead of me on the personal loans (I only have two). But, I've heard some lenders have a hard limit of 4. Find a different lender that will get to the Fannie/Freddie limit of 10. You may also be reaching a DTI limit.

You'd have to find a commercial lender that will finance a single family (most wont). And if you found one, it doesn't much matter if it's in an LLC as those don't get reported the same way.

You're better off finding a traditional 1-4 residential lender that doesn't have that 4 property max overlay (since I believe the real limit is 10)

Echoing @Cody L. , the real limit is 10. I currently have 6 mortgages in my name. I used to have to put 25% down for MF, now I need to put down 30% for #7-10

Chris Mason can get you approved up to 10 financed properties.

@Nicholas Preston , everyone else is right on the money with 10 properties.  Some institutions have their own internal rules.  After the 10th, you will need to transition to "commercial" lending where money is still readily available, but terms are not quite as sweet at Fannie/Freddie. 

A traditional Fannie/Freddie lender will not lend to an LLC. To do that right out of the gate, you would need to get a commercial loan. You don't really need to do that yet as you can get the traditional financing in your name and transfer title into your LLC if you have one. There is a technically the possibility of a DOS clause where the bank could call the note due, but that wouldn't make sense and they don't typically do that. Just FYI.