Kansas City, MO · Member since 2013 · 3 posts · 1 vote
I want to secure rental properties I purchase under my LLC to mitigate risk but have run into a few hurdles. I own one rental property outright and am seeking financing to purchase another property. I also have an LLC setup but have done nothing with it. I've called several banks about opening a business account in my LLCs name and getting financing but they are telling me that I have to personally hold the property in my name and can't move it to my LLC until I pay the loan off. I understand being personally responsible for the loan but don't understand why I can't put the home in my LLCs name. Am I going about this the wrong way? Are there any good books that walk you through this process? What's the point of have an LLC if I can't buy properties in its name?
Real Estate Broker · Orange, CA · Member since 2008 · 380 posts · 87 votes
12y
correct! All loans on 1-4 unit rental property are backed by Fannie/Freddie guidelines you will not find a lender who will fund a loan in your LLC, Partnership or Corp! There are alternative financing but you probably want the low 30 year fixed Fannie/Freddie backed rates I'm assuming?
What is commonly done is you pull the property out of the entity fund the loan then put the property back into the entity.
People will argue it will trigger the due on sale clause but I am unaware of any of that happening. Worse case is if it does trigger the due on sale clause is the give you something like 30 days notice and you just quit claim it back into your into your name.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
I am going to bail out of this conversation. Joe isn't willing to provide anything that BP members can benefit from, and recent posts aren't helping answer the OP question(s).
I'll only add that for property with GSE loans, the post I made 12/27/13 is an effective way to get GSE loan benefits (low, long term rate) without issue. For loans 10-100+, acquiring via a multi-member LLC through a commercial/portfolio/private lender is more beneficial than any other option. That's my answer to "What's the point of have an LLC if I can't buy properties in its name?" You can... just not with GSE financing.