Banks won't lend to Land Trusts anymore?

Question

So, I just went into a purchase agreement on a 4-plex.  For those of you that have followed my posts, yes, this is the one with the large lady.  However, I have run into a new problem.

The issue is that I want to take title in a land trust, and refinance in 6 months so I can pull my rehab capital out, BUT I was told from several lenders that they don't lend to land trusts anymore.  One of them even told me "it's OK, you can just grant deed title into your personal name, then grant deed it back into the trust."  (Uh, moron, this defeats the whole purpose of having a land trust).

So, I guess it's beginning to look like my only play at this time is to just take title in my LLC, vs. the land trust with my LLC as the beneficiary set-up I originally wanted.

Thoughts/experiences?

Steve Babiak · Answer

There are lenders lending to LLC entities.  But it's not your conventional residential financing; it's called a commercial loan.  Ask around with your local small to mid-size banks.

Not sure regarding lending to a land trust (they don't work too well in my state of PA).

Randy H. · Answer

You need to deal with a different lender. Lenders that sell their loans in the secondary market will not let you close using a land trust. Use a portfolio lender...one that will keep the loan in-house.

Mitch Kronowit · Answer

If they won't let you take title in your land trust, why would they let you take title in your LLC? From what I've seen lately, lenders insist on the borrower taking title, no if's, and's, or but's, even if you tell them it's for "estate planning". And you're right, granting it over afterwards still leaves your name all over the place eliminating your privacy.

But let me know if they'll let your LLC take title. I'll start using YOUR lender!