Can you rent a property from your LLC?

Question

Hi all,

I'm hoping to move to the US hopefully this year (Tampa) and would ideally like to get into a house hack/my own property straight away as rent is rather expensive. However I don't think this is likely as I'll have neither a credit score or history of income (either in the US or in the UK) and don't have enough cash to purchase somewhere outright and doubt I'd qualify for a regular residential mortgage. I'm aiming to buy an existing business in the US though which would have proof of income that I could show if that would be possible.

My question is whether it would be possible to get an investment/asset loan (based on the property income/performance not my own credit/income) itself under an LLC and rent it to myself. I'm aware that investment loans are strict on not being for owner occupied which is why I'm interested in knowing whether renting to myself gets around that? As a side question, if it's not possible to rent from an LLC which you own would it then be possible to rent from an LLC owned by a family member?

I'm just trying to think of a cost effective way to live without paying rent to someone else if I can rent my own property or from a family member and buy another property when I can qualify for a residential owner occupied mortgage.

I appreciate any ideas and replies. I plan on speaking to some lenders but thought I'd ask here also.

Thank you

Tom O. · Answer

You're really putting the cart before the horse here aren't you? You don't even have your residence and you're already trying to get around the mortgage/investor rules on your second place which you also don't own yet? I can think of so many other things you should be thinking about and not this.

But to  give you something of an answer: your best bet is what's called NOMAD where you keep buying your own residence and live in it for a year before repeating. That way you keep getting to put down a low down payment and are not running afoul of anything. Plus, once you buy something what do you really think your odds are of having the ability to buy another something right away? That you want to live in?

Nick Belsky · Answer

Yeah... no lender is going to let you purchase under an LLC or entity and they rent to yourself... That is usually considered owner occupied and throws all kinds of flags.

Tom S. · Answer

@Rami Holzman  Covered above, no lender is going to do that as they'll require a personal guarantee from you.

Best bet is to open a few secured credit cards, pay them on time and in a year you should have a decent credit score.  Then apply for a FHA loan which is 3.5% down and a min score of 580 (620 for some lenders).

You can also look for seller financed deals.  You may have to put a little bit more down (10%) but that's a good option too.  My first 3 houses were seller financed deals.

Good luck!

Carini Rochester · Answer

"No lender is going to do that."

I do it.

My business rents office space in a building my LLC owns. My commercial lender was fine with it. This isn't residential. I don't rent 100% of the building, 25%. My business has been in business for 30 years with excellent financials. Maybe they usually don't do it, but they did it for me.

Rami Holzman · Answer

Down payment isn't necessarily the issue, it's more the financing (since I won't have credit score/income history in the US etc.). I'll likely have a couple hundred thousand in cash. I need to talk to some lenders to get a better idea of financing requirements. I appreciate your reply, I certainly could do with looking into creative financing some more as it may be my only option for a year or two.

Rami Holzman · Answer

That's the goal. Just got to wait a bit to get financing. The downpayment side of things isn't the issue, just finding lenders I think. I need to do some research and message around a bunch of lenders to see what their lending criteria is for someone like me coming over on a non-immigrant visa (can be renewed indefinitely). From what I hear I think I'll be waiting perhaps 1-2 years till I can qualify for a residential mortgage.

Michael Haynes · Answer

Rami Holzman, you need to learn how to use Zillow.com to do Searches for properties. The only way you could buy something without Money is to study Creative Financing with BP etc. Then, think of looking for a Trailer or Manufactured Home For Sale by Owner on it's own lot outside of town. I found a 4/2, all wooden, 1980 sq. foot house with metal roof, on a property with some type of problem. It's just off a main Highway with all kinds of shopping, for $109,000 All Cash, near me. There are not many Deals around, but, you need to learn how to do your own Searches.

Tom S. · Answer

@Rami Holzman  The easiest way to build a portfolio is to move into a house using the low downpayment and rates offered for owner occupied (OO).  Live in it for a year or so, then move into another, again using the OO downpayment and rates.  Keep the original as a rental.  Continue to repeat this process each 1-2 years.

Rami Holzman · Answer

Thanks for the replies all, as suspected looks like I'll have to wait and build up credit to buy with a residential mortgage a year or two down the line. I certainly plan on utilising FHA loans if possible.

In which case is buying a regular rental property doable just to start building up a portfolio? I'm assuming down payment requirements will be higher but this wouldn't be an issue for me as I would be coming over with enough cash even if it's 30% or so. I'm not expecting great rates etc. just interested if financing is possible at all in this situation or if again I'm looking at needing to wait a year or two.

Can you rent a property from your LLC?

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