Using LLCs to Purchase or using Quit Claim Deeds?

4 Replies

My current mortgage guy says I can't buy a rental house under an LLC. Has to be my name. Do I just need to find a different bank that will allow it? Or do no banks allow it?

I could also do the Quit Claim Deed after the fact. I'm apprehensive of having the Due-on-Sale be triggered, and/or being forced to re-fi.

What are people's experiences - have you been allowed to buy a Single Family under your LLC? Have you ever heard of a Quit Claim Deed being triggered?

*Note: I currently have 1 rental property in my name. I am planning on transferring to LLC. Secondly, I plan on buying more, and was really deflated to hear I can't purchase under an LLC. Again... not sure if its a bank-to-bank thing or if all banks do that.

Thanks in advance for your insight.

Many of the major banks won't don't like working with LLCs, but more of the local lenders are okay working direct with an LLC. You would need to be willing to work with commercial mortgage rates, though, which impacts your bottom line.

One of the most common strategies for investors to still get the favorable financing available through their personal name while utilizing the liability protection of the LLC is by simple adding a Land Trust. You would purchase the property into your personal name, and after the sale transfer the property into the Land Trust and assigning the LLC as it's beneficiary. This is a protected transfer because it is considered an Inter Vivos Trust [an estate planning tool] and excluded from the Due on Sale Clause thanks to the St Germain Act. This article goes into the strategy in a bit more detail. You can also wrap it up easily into future estate planning and introduce more privacy into your portfolio with the Land Trust, so they are quite functional.

Hope this helps! Feel free to shoot any other questions my way if I missed anything.

Thanks Scott so much for your reply. 

By doing the land trust with LLC as beneficiary, am I still getting that extra layer of liability protection that an LLC supposedly provides?

I say "supposedly" only because I know the layer can still be pierced. I'm just want  to do whatever I can to protect my personal assets.

Hey @Leigh Jones ,

I saw you were looking to switch things over to the land trust and the LLC as the beneficiary. If you want to make sure that your personal name is not on the property make sure you remove it from your insurance on the property also. If you need any help with that or want someone just to take that off your plate let me know. Feel free to reach out.

GOOD LUCK!

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