How to obtain a 30 yr fixed mortgage under an LLC

Harpers Ferry, WV · Member since 2016 · 13 posts · 3 votes

I have a couple mortgages under an LLC that are commercial loans. They are adjustable rates and balloon after 10 years. This isn't an ideal situation for me even at the deal I acquired the properties for. I have heard some horror stories of there being no money available to refinance at the end of the term. So my question, is there a way to get a 30 year fixed mortgage under the protection of an LLC?

Could you purchase the property in your name and transfer into the LLC? I know that this can trigger the "due on sale" clause with the lender but I've heard there are ways around this using a land trust?

Thanks for your insight

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Kenneth GarrettPro Member

Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes

@Drew Kessler

I use commercial loans all of the time. Every loan and different banks are at 20 or 25 year amortization. Some balloon at 5, 10 and 20. If you want 30 year you will need to put it in your name. You may need to house hack.

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NaDean Bowles
Investor · Little Rock, AR · Member since 2016 · 152 posts · 40 votes
9y
If you use a private money lender that finances for 30 years and loans to LLC's, then yes. Yes, they exist.
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NaDean Bowles
Investor · Little Rock, AR · Member since 2016 · 152 posts · 40 votes
9y
@Drew Kessler, bumping the previous post.
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Drew Kessler
OP
Harpers Ferry, WV · Member since 2016 · 13 posts · 3 votes
9y
In the podcasts I listened to they said 30 year fixed was the norm for single family or units up to 4. Are they just talking about if you were to get the loan in your name? There must be another way.
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Daniel P.Pro Member
Investor · Winchester, VA · Member since 2017 · 104 posts · 70 votes
9y
Drew Kessler I have called countless banks and have not had a single one have this option for a business. The best I found was a 15 year fixed. I have 2 loans done privately on 30 year notes so it is possible.
1 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
9y
@Drew Kessler
I use commercial loans all of the time. Every loan and different banks are at 20 or 25 year amortization. Some balloon at 5, 10 and 20. If you want 30 year you will need to put it in your name. You may need to house hack.
2 Reply
Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Drew Kessler most investors close in a conventional loan and switch title over to an LLC after closing. There are also plenty of other loans that will close in an LLC with a 30 year rate. They will carry a higher rate than a conventional loan but they are out there.
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Drew Kessler
OP
Harpers Ferry, WV · Member since 2016 · 13 posts · 3 votes
9y
Originally posted by @Andrew Postell:

@Drew Kessler most investors close in a conventional loan and switch title over to an LLC after closing. There are also plenty of other loans that will close in an LLC with a 30 year rate. They will carry a higher rate than a conventional loan but they are out there.
So how do they switch it over without the bank enforcing the "due on sale" clause?
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Drew Kessler if you pay on time the bank doesn't care about the "Due on Sale" clause. That clause gets talked about a lot and isn't as foreboding as some people talk about it. It is important to know about but it is mainly a tool to assist banks in the foreclosure process in some of the more difficult states. However, it isn't even legal in some states. Plenty of investors switch after closing with no problems....just pay that mortgage on time.
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Cole A.
Overland Park, KS · Member since 2013 · 55 posts · 12 votes
9y
I'll second @Andrew Postell's advice. We are closing on a rental right now, 30yr conventional investment mortgage. Lender has said that earlier in the year, federal regulations were passed that won't allow you to get a conforming mortgage in the name of an LLC. You would have to a apply for and close the loan in your name, agreeing to be personally liable for the debt service. After closing, quitclaim deed to an LLC (if you feel it's necessary). That will change the title to the LLC, but you are still personally named on the mortgage.
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Michael Cohen
Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
9y
The lender could demand full payment (i.e. the entire mortgage) be satisfied within 30 days if you do a quitclaim to an LLC. There are a lot of forum posts about it so I won't get into it, but it's a very real issue.
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Drew Kessler
OP
Harpers Ferry, WV · Member since 2016 · 13 posts · 3 votes
9y
I have heard there is a way using a land trust but don't know the details.
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Odie Ayaga
Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
9y
@Michael Cohen is right. There should probably be some sort of FAQ that addresses transferring title to an LLC after purchase and the potential repercussions. A few BP searches could probably provide you with a wealth of information that is greater than you'll get in this single thread
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Rob CucuglielloPro Member
Philadelphia, PA · Member since 2017 · 27 posts · 9 votes
7y
@Drew Kessler - did you ever land anywhere with this? I have the same question and am unsure the best way to move forward with new purchases.
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Alex BekezaBusiness Member
Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
7y
@Rob Cucugliello @Drew Kessler I know this thread is a bit old but figured I'd add that in the last 12 months I've seen several wholesale commercial lenders roll out 30 year fixed options. Vesting in a LLC is no problem, there is no balloon, and commercial rates are lower now than when this thread starte

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Drew Kessler
OP
Harpers Ferry, WV · Member since 2016 · 13 posts · 3 votes
7y
@Alex Bekeza
Interesting. Since my post I have acquired a dozen more properties and have them all financed through commercial loans. So does your firm offer these loan products?
1 Reply
Jason Morris
Member since 2019 · 40 posts · 7 votes
6y
Originally posted by @Cole A.:
I'll second @Andrew Postell's advice. We are closing on a rental right now, 30yr conventional investment mortgage. Lender has said that earlier in the year, federal regulations were passed that won't allow you to get a conforming mortgage in the name of an LLC. You would have to a apply for and close the loan in your name, agreeing to be personally liable for the debt service. After closing, quitclaim deed to an LLC (if you feel it's necessary). That will change the title to the LLC, but you are still personally named on the mortgage.

If you are personally liable for the loan, wont this defeat the purpose of having an LLC? Protection wise.
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
6y
@Jason Morris I would probably guide you here that the answer to that question should really come from an attorney. I have heard some people say use the LLC. I've heard some people say, put it in a land trust. I heard some say, get good insurance. There's other strategies too. So I don't think we can say what is the "right" method to do here but if you want to change to your LLC, then there's not really an issue in doing so from the loan standpoint. That's kind of the point to this post. Hope that helps.
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Jason Morris
Member since 2019 · 40 posts · 7 votes
6y
Originally posted by @Andrew Postell:
@Jason Morris I would probably guide you here that the answer to that question should really come from an attorney. I have heard some people say use the LLC. I've heard some people say, put it in a land trust. I heard some say, get good insurance. There's other strategies too. So I don't think we can say what is the "right" method to do here but if you want to change to your LLC, then there's not really an issue in doing so from the loan standpoint. That's kind of the point to this post. Hope that helps.

OK. Thank you. Would this be something to speak with a real estate attorney about or a business attorney?
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
6y
@Jason Morris hmm, well, maybe try posting that question in the "Tax and Legal" forum? I think they might be able to guide you a little better than I could.
1 Reply
Dylan Nelson
Lender · Salt Lake City, UT · Member since 2019 · 23 posts · 8 votes
6y
Late to the party, but you can definitely get a 30 yr fixed mortgage with a private lender with the borrowing entity as an LLC. Most rates are mid 5's so you're paying a premium. Most banks are still at a 5 or 10 fix over 20/25 years.
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Mike S.
Member since 2018 · 44 posts · 36 votes
6y
@Dylan Nelson Thanks for revisiting this post--and helping field a question that I know many have. Do you have any recommendations for specific private lenders offering 30 year fixed mortgages with an LLC as the borrowing entity? The few I've encountered in doing some cursory initial research have had rates higher than the mid 5's you mentioned so your post definitely caught my attention. Thanks in advance!

1 Reply
Dylan Nelson
Lender · Salt Lake City, UT · Member since 2019 · 23 posts · 8 votes
6y
@Mike S. What is the property type, desired LTV, and DSCR? Feel free to send me PM. Thanks!
1 Reply
Nicolas Dib De Castro
Lender · San Antonio · Member since 2020 · 15 posts · 5 votes
6y
@Mike S. Dylan is right, there's hard money to do 30yr mid 5s. It can be done with an LLC, The rate will depend on LTV and credit score.
1 Reply
Odie Ayaga
Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
6y
@Mike S. have you actually spoken to any of them? Long-term mortgages tend to be quite variable when it comes to hard money lenders. There are a lot of ways to buy down rates or different options depending on what it is you want.
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Mike S.
Member since 2018 · 44 posts · 36 votes
6y
@Dylan Nelson--Thanks so much. I'll send you a PM. I greatly appreciate it.

@Nicolas Dib De Castro--Thanks for sharing your insights on the availability of these loans as well. That's great to hear that 30 year fixed mortgages for an LLC are not as elusive as one often hears.

@Odie Ayaga--Thanks for the insights and the reminder that buying down rates is also feasible with these loans. All of my recent conversations with lenders have focused on borrowing as an individual. Knowing that 30 year fixed mortgages to an LLC are definitely feasible gives me reason to explore some new options and opportunities. Needless to say, I'll be talking with lenders about this. Thanks again.
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