DSCR loans and LLCs - which state?

Question

I am in MO. If I am buying a property with a DSCR loan in another state and want to put it in a LLC, does the LLC’s state matter to the lender or affect the protection the LLC provides?

Robin Simon · Answer

No, it shouldn't be an issue

Matt Cartwright · Answer

@Paul Winka The only thing I would be careful of is creating the LLC in the state that you plan on conducting business. For example if you live in FL and are trying to purchase a property in MO with an LLC created in FL you would likely need to complete a Foreign Filing that gives your LLC permission to operate in another state to abide by those laws and regulations.

If you need any guidance on this purchase just let me know!

Mike Singer · Answer

Shouldn't matter to the lender, they either allow to close in an LLC or they dont. Each state does provide different protections for liability purposes though. There's lots of detailed videos from attorneys on youtube for this subject. I would verify with a professional before making a decision, but a good place to start.

Alex Bekeza · Answer

@Paul Winka I have a CA LLC but all of my rentals are in MO.  I've also originated hundreds of commercial loans many of which had the vesting with "foreign LLCs" (LLCs formed outside of the subject property state.  Lenders typically just want to see a Certificate of Foreign Qualification from the state you're investing in.  The exact name of this document varies state to state but they all have some sort of equivalent.  As you'd imagine, the processing and times are instant in some states and weeks in others.  You can typically file these yourself on the States Secretary of State Website. However, I originally used legalzoom's rush service when I was in a time crunch.

Anastasia G. · Answer

@Paul Winka

New LLC can be established during process, contract addendum stating title vested in the name of newly formed LLC will need to accompany LLC docs:

• Purpose of the LLC is      for the ownership and management of real estate
• Articles of      Incorporation.
• Operating Agreement with      Ownership Breakdown or Addendum

You lender should be able to provide you all info needed. The info provided above will cover most of requirements.

Richard Munoz · Answer

May close DSCR under LLC.

Camile Case · Answer

Wouldn't matter to the Lender. I'd suggest to create a LLC in the state where the property is located - anything otherwise will incur a fee to do business in that particular state as a foreign entity.

Nick Belsky · Answer

@Paul Winka

You'd work through title with the attorney.  More than likely, you'd never actually speak to or hear directly from one.  Your escrow/title agent is the one who handles them.

Cheers!

Bobby Feinman · Answer

not if you're comfortable doing it.

DSCR loans and LLCs - which state?

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