Selling as private owner to a 100% owned LLC via DSCR loan

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Selling as private owner to a 100% owned LLC via DSCR loan

Marcus Jimenez
Member since 2019 · 4 posts · 0 votes

Hell Bigger Pockets Fam, 

I am wondering if it is legal to sell an investment property that I am currently under my personal name to my LLC via a DSCR loan. This would transfer title to my LLC and allow me to technically cash out refi + force appreciation a bit. Curious if anyone has tried this.

Thanks! 

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Mark MunsonBusiness Member
Lender · Orlando, FL · Member since 2022 · 440 posts · 300 votes
3y

Hi @Marcus Jimenez

I can't speak for every lender, but that is unlikely. It is a non-arm's length, meaning a purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property. That is not allowed. Why wouldn't you just cash-out refinance into your LLC? That can be done.



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  • Mark MunsonBusiness Member
    Lender · Orlando, FL · Member since 2022 · 440 posts · 300 votes
    3y

    Hi @Marcus Jimenez

    I can't speak for every lender, but that is unlikely. It is a non-arm's length, meaning a purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property. That is not allowed. Why wouldn't you just cash-out refinance into your LLC? That can be done.



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  • Marcus Jimenez
    OP
    Member since 2019 · 4 posts · 0 votes
    3y

    Thanks Mark! The LLC would be a holding LLC for the property with no real income. Would I be able to qualify for a loan in the LLC name with this set up? I assumed that is why a DSCR loan would be needed, to use the rents for loan approval.

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  • Daniel ChristopherBusiness Member
    Lender · Miami, FL · Member since 2020 · 796 posts · 96 votes
    3y
    Quote from @Marcus Jimenez:

    Hell Bigger Pockets Fam, 

    I am wondering if it is legal to sell an investment property that I am currently under my personal name to my LLC via a DSCR loan. This would transfer title to my LLC and allow me to technically cash out refi + force appreciation a bit. Curious if anyone has tried this.

    Thanks! 


    Why not refinance via a DSC R loan and just change the name on the title to an LLC at closing? We've refinance mortgages off of peoples personal names into an LLC plenty of times before.

    Depending on the county/local tax guidelines you may have to pay a transfer tax.

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  • Erik EstradaBusiness Member
    Lender · Los Angeles, CA · Member since 2022 · 7k+ posts · 1k+ votes
    3y
    Quote from @Marcus Jimenez:

    Hell Bigger Pockets Fam, 

    I am wondering if it is legal to sell an investment property that I am currently under my personal name to my LLC via a DSCR loan. This would transfer title to my LLC and allow me to technically cash out refi + force appreciation a bit. Curious if anyone has tried this.

    Thanks! 


     Hey Marcus, 

    Why don't you do a refi with a DSCR loan? If you are concerned about the LTV, you may do up to 80% on a cash out refi as long as it has 6 month seasoning and the DSCR is above 1.0

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  • Max Fisch
    Lender · Conshohocken, PA · Member since 2016 · 11 posts · 3 votes
    3y

    Thanks for the question!  In short, yes, you can absolutely do what you are looking to do however, the best course of action I outlined below.  Instead of a 'sale' do this:

    1.  Find a lender you feel confident with and start the application process.

    2. Tell them UPFRONT that you want to deed YOUR property to YOUR entity (llc, etc) AT CLOSING and that the LLC will be 'the borrower'.

    3.  The lender should ask for your entity docs and the closing attorney or title company can handle the quit claim (or other) deed.

    4.  Close your close.

    **We do these all the time and they are extremely straight forward.  Should you have additional questions feel free to reach out to myself or any of my team.  Good luck!!!


     

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  • Brayden Hrycko
    Lender · Allentown, PA · Member since 2023 · 207 posts · 38 votes
    3y

    Hey @Marcus Jimenez,

    You're going to go off the appraised value anyway. Just DSCR refi the property and transfer ownership to the LLC. Super simple process!

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