Hi, I'm a mortgagor of a few investment properties. All of the properties are under LLC for liability reasons. Of late, I've learnt from bankers about severe restrictions on buying additional properties considering the number of rentals that I have. Some bankers don't lend if the properties exceed a certain number. And also mortgages on the properties is adversely impacting my debt-to-income (DTI) ratio when rental income is not considered. With this situation, would switching to a commercial/portfolio loan for all of them (on LLC) help me buy additional properties and improve my DTI ratio? Appreciate your answers. Thanks in advance.
Lender · Boulder, CO · Member since 2019 · 44 posts · 35 votes
5y
Hi @Bhanu A., one way you could free up some slots for traditional mortgages would be to take cash out of one or more properties and use that to payoff other properties so that they are free an clear. This would only be feasible if the properties have substantial equity that would allow for a complete payoff of one or more properties. Financing the properties in an LLC wont typically avoid the issues you will have with too many financed properties because the properties will still come up during the underwriting phase
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
5y
@Bhanu A. it depends, you can have a loan in an llc, but if you personally are guaranteeing the loan then it will count against your DTI. However if you can get a commercial non-recourse loan in an llc, then you can start removing debt from your name!