When financing under a conventional mortgage, best protection?

Question

When financing a property under a conventional mortgage, which requires the loan be under you personally, how do you protect yourself legally? Obviously a conventional mortgage offers the best terms, which can improve cash flow. But these require the mortgage be under your personal name. How do you protect yourself legally? I typically operate under an LLC and want to ensure I'm

Protected. But I also want to use the conventional mortgage when possible.

Kirby Davis · Answer

@Cameron Tope thanks, Cameron. This is exactly what I was thinking - get that great financing to really push your cash flow. I was hoping I could transfer the deed. We have a trust and a couple of LLC’s we operate under currently. I’ll get my lawyer involved. Appreciate the advice!

Cameron Tope · Answer

@Kirby Davis You're 100% correct - you want to capture the cheaper financing under your personal name, which is exactly what we've done.

Speak with a local attorney but I purchase in my personal name then transfer the deed to LLC or Land Trust.

One thing to consider is how many properties do you have? Personally, I didn't worry about this until I had over 5 properties.

Happy investing!

Matt Crusinberry · Answer

@Kirby Davis, We use both personal names and LLC's for our properties as well. As far as insurance, we use rental insurance (standard for the most part) and then we put it under our umbrella policy. It's a little more expensive, but it pushes past the 2mm, and it's added security. Also, I have heard of ways around this, in regard to acquiring the loan in your name but upon closing being able to put it into an LLC. While I've never done this, nor have I researched it out to point you in the right direction, I do find it interesting and something we'll probably look into. This goes without saying, but I'm sure a good RE attorney would be able to speak better on this. Good luck, and I hope this helped out a little.

Kirby Davis · Answer

@Matt Crusinberry Thanks, Matt. I appreciate the insight.