Financing properties held in an LLC

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Financing properties held in an LLC

Paul Sanders
Member since 2022 · 16 posts · 1 vote

Hi BiggerPockets community,

I own a property in Brian Head, Utah, currently used for short-term rentals. I'm in the process of forming an LLC to hold the property and eventually plan to structure fractional ownership within that LLC.

I’m looking for recommendations for lenders who:

  • Are comfortable financing properties held in an LLC.
  • Understand or can accommodate long-term plans for fractional ownership.
  • Ideally have experience with short-term rental properties in resort markets like Brian Head.

If you’ve worked with a lender who fits this profile or have insights on what lenders look for in these scenarios, I’d really appreciate your advice.

Thanks in advance for your help!

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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
9mo
Quote from @Paul Sanders:

Hi BiggerPockets community,

I own a property in Brian Head, Utah, currently used for short-term rentals. I'm in the process of forming an LLC to hold the property and eventually plan to structure fractional ownership within that LLC.

I’m looking for recommendations for lenders who:

  • Are comfortable financing properties held in an LLC.
  • Understand or can accommodate long-term plans for fractional ownership.
  • Ideally have experience with short-term rental properties in resort markets like Brian Head.

If you’ve worked with a lender who fits this profile or have insights on what lenders look for in these scenarios, I’d really appreciate your advice.

Thanks in advance for your help!


I think the tricky part will be the "fractional ownership". Are there multiple members in the LLC? Most DSCR lenders will allow up to 4 members only. Additionally, there will need to be a personal guarantee on the loan. This will require at least 21% ownership for a natural person.

[email protected]818-269-7983
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  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
    9mo
    Quote from @Paul Sanders:

    Hi BiggerPockets community,

    I own a property in Brian Head, Utah, currently used for short-term rentals. I'm in the process of forming an LLC to hold the property and eventually plan to structure fractional ownership within that LLC.

    I’m looking for recommendations for lenders who:

    • Are comfortable financing properties held in an LLC.
    • Understand or can accommodate long-term plans for fractional ownership.
    • Ideally have experience with short-term rental properties in resort markets like Brian Head.

    If you’ve worked with a lender who fits this profile or have insights on what lenders look for in these scenarios, I’d really appreciate your advice.

    Thanks in advance for your help!

    Hey @Paul Sanders, welcome to the BP Forum! Are you partial to local bank/credit union or Hard Money lenders? I believe BH is considered "rural", so I suspect your best bet would be to reach out to a local bank like SBSU.

    [email protected]
    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    9mo
    Quote from @Paul Sanders:

    Hi BiggerPockets community,

    I own a property in Brian Head, Utah, currently used for short-term rentals. I'm in the process of forming an LLC to hold the property and eventually plan to structure fractional ownership within that LLC.

    I’m looking for recommendations for lenders who:

    • Are comfortable financing properties held in an LLC.
    • Understand or can accommodate long-term plans for fractional ownership.
    • Ideally have experience with short-term rental properties in resort markets like Brian Head.

    If you’ve worked with a lender who fits this profile or have insights on what lenders look for in these scenarios, I’d really appreciate your advice.

    Thanks in advance for your help!


    I think the tricky part will be the "fractional ownership". Are there multiple members in the LLC? Most DSCR lenders will allow up to 4 members only. Additionally, there will need to be a personal guarantee on the loan. This will require at least 21% ownership for a natural person.

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    1Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 495 votes
    9mo

    Properties owned by an LLC can not be financed with a conventional loan. Many investors use DSCR loans. Depending on the lender, there's usually a limit on how members can be in the LLC. A personal guarantor is needed and the credit score will be one of the items that structure the loan. DSCR loan options also vary by state.

    More on DSCR loans: DSCR loans won't use your income to underwrite the loan. DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

    Here's a bit more in detail about how rates are calculated for DSCR loans:

    1. Credit score- the higher the better. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

    2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

    3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

    4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

    I've included an example below to help illustrate this.

    So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

    See example below:

    DSCR < 1

    Principal + Interest = $1,700

    Taxes = $350, Insurance = $100, Association Dues = $50

    Total PITIA = $2200

    Rent = $2000

    DSCR = Rent/PITIA = 2000/2200 = 0.91

    Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

    DSCR >1

    Principal + Interest = $1,500

    Taxes = $250, Insurance = $100, Association Dues = $25

    Total PITIA = $1875 Rent = $2300

    DSCR = Rent/PITIA = 2300/1875 = 1.23

    If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

    DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

    Happy to connect to discuss further. 

    [email protected]818-770-0340
    Bright Skyline518 Reviews
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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    9mo
    Quote from @Paul Sanders:

    Hi BiggerPockets community,

    I own a property in Brian Head, Utah, currently used for short-term rentals. I'm in the process of forming an LLC to hold the property and eventually plan to structure fractional ownership within that LLC.

    I’m looking for recommendations for lenders who:

    • Are comfortable financing properties held in an LLC.
    • Understand or can accommodate long-term plans for fractional ownership.
    • Ideally have experience with short-term rental properties in resort markets like Brian Head.

    If you’ve worked with a lender who fits this profile or have insights on what lenders look for in these scenarios, I’d really appreciate your advice.

    Thanks in advance for your help!

    Hi Paul, there are a ton of qualified lenders here who this may fit. What I recommend is working with an experienced broker who can get you the best terms across a wide variety of lenders and at be efficient/creative get the loan approved. Hope that helps! Good luck 
    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
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    0Reply
  • Ali Najjar
    Lender · NJ · Member since 2025 · 50 posts · 23 votes
    9mo

    Hey Paul, check out quickerhomeloans.com. We have everything under the umbrella STR, including your exact scenario & can do business in UT.

    0Reply
  • Frankie VozziBusiness Member
    Member since 2025 · 332 posts · 82 votes
    9mo

    Hey Paul! Your project in Brian Head sounds exciting! It’s great to see someone working on fractional ownership in the short-term rental space.

    We at Branch Lending are definitely comfortable financing properties held in an LLC, I'd be happy to chat more about your plans and see how we can help!

    [email protected]516-888-7750
    0Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes
    9mo

    Yes, I do lots of STR refinances. I can guide you on what you'll want to start doing to get yourself ready.

    0Reply
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