TRANSFERING PROPERTY INTO LLC

[Colby Wartman]

I purchased an investment property 3 months ago using Lower.com for financing. Had a very great experience with them except for one thing. We purchased as an investment property under our personal names under the guidance of our lender. Over the phone (not in writing, unfortunately) our lender said that once we purchase the property we would be able to easily transfer the property into our established LLC no questions asked, just go through the process. Come to find out, Lower.com has a clause that the property has to be paid off in full before we can transfer the property.

My question is, I have seem many people with many different experiences with this. We would like to transfer the property from our personal names into the LLC. How can we make this possible? What have you all done in the past? Thank you so much!

[Brian Bohrer]

Hey Colby,

I have not done this myself, but I did talk to an investor last week who has done this several times.  He told me that if the loan was a conventional Fannie/Freddie type loan then the Due-on-Sale Clause would most likely never be executed.  Once this loan is "lost" down the secondary mortgage market there is a highly unlikely chance it will ever be called due for this reason.  In addition to this, as long as the note is being paid by someone, the loan servicer is most likely not going to spend the time looking through past verifying closed loans unless prompted to.  

I would want to hear other members thoughts first, but this seems to be the general consensus that I have come across.

Good luck in your adventure and shame on Lower.com!  haha   

Take care,

[Nicole Heasley Beitenman]

@Colby Wartman You can purchase due-on-sale insurance to cover you should the DOS clause ever be called post-transfer.

[Richard Bechtol]

You can utilize a Land Trust in order to avoid the due on sale clause.

[Kenny Smith]

@Colby Wartman

If you absolutely had to, you could always refinance with a different lender. Could be an option if rates drop below what your rate is over the next year or two. And put the property into your LLC at that time.

I've never done this, but I believe this could be an option for you.

[Brian Bohrer]

Quote from @Nicole Heasley Beitenman:

Colby Wartman You can purchase due-on-sale insurance to cover you should the DOS clause ever be called post-transfer.

Hey Nicole, I have never heard of this.... Is it expensive? I have a $100,000 mortgage and am currently creating an LLC to transfer it into. What would you guess as an estimate of cost for this insurance?

Thank you!

[Brian Bohrer]

Quote from @Richard Bechtol:

You can utilize a Land Trust in order to avoid the due on sale clause.

Hey Richard, 

Would you mind offering a little explanation or a resource of where I could go to educate myself?

Thank you!

[Nicole Heasley Beitenman]

Quote from @Brian Bohrer:

Quote from @Nicole Heasley Beitenman:

Colby Wartman You can purchase due-on-sale insurance to cover you should the DOS clause ever be called post-transfer.

Hey Nicole, I have never heard of this.... Is it expensive? I have a $100,000 mortgage and am currently creating an LLC to transfer it into. What would you guess as an estimate of cost for this insurance?

Thank you!

 I've never dug into it, but here's where I learned about it: https://www.biggerpockets.com/...