LLCs and lending on SFR properties

[Micah Smith]

I have 4 properties. My attorney suggests the best thing for me is one LLC per home. I asked my lender, who is great, and she has concerns with individual LLCs - she says many lenders will not lend to LLCs or properties within LLCs. She uses a trust and umbrella insurance. I will also have a trust and an umbrella policy within the next few weeks. I want to be able to both protect my investments as well as grow them through leverage. Currently, I have less than 10% leverage, total. Any perspectives from this community will be appreciated. Thank you in advance!

[Alex Bekeza]

@Micah Smith I would recommend contacting another loan officer. It's quite common for our clients to come to us with newly formed entities to vest title in. DSCR lenders don't require that the LLCs have any history and even FAVOR them right now in many cases with better pricing (over individual borrowers). Having the LLC owned by a trust adds an extra layer of complexity to the lender and so I've seen a handful begin to deny trust owned LLCs (but not all). However, a LLC owned by 1-5 members is really simple to figure out and right now 30 year fixed financing would be either in line or only a few BPS higher than conventional at say 75% LTV (rates in the low 7s as of 2/8/23). The LLC just needs to be a single purpose entity for the sole purpose of real estate investing.