Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Private Lending & Conventional Mortgage Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated 3 months ago on . Most recent reply

User Stats

14
Posts
16
Votes
Nicholas Cavato
Pro Member
  • Investor
  • Cleveland, OH
16
Votes |
14
Posts

FHA vs Conventional with LLC involved

Nicholas Cavato
Pro Member
  • Investor
  • Cleveland, OH
Posted

Looking for advice from you BP pros out there.

I will be purchasing either a single family residence or multi family residence home in the Cleveland, Ohio area no later than January 2025 and intended on purchasing using an FHA loan with an already formed Ohio LLC. I plan on doing a live in rehab, moving out of the residence after 1 year and doing a long term rental after moving out.

However, my lender told me I can not purchase a residence with an FHA loan under an LLC, which I now understand.

In general, is it more financially beneficial (cash on cash return) to purchase:

1. With an LLC using conventional loan

Or

2. As an individual with an FHA loan

I appreciate any additional guidance you all have for me.

Thanks!

  • Nicholas Cavato
  • [email protected]
  • 602-529-6389
  • Most Popular Reply

    User Stats

    1,110
    Posts
    626
    Votes
    Nick Belsky
    Lender
    Pro Member
    • Residential and Commercial Broker
    626
    Votes |
    1,110
    Posts
    Nick Belsky
    Lender
    Pro Member
    • Residential and Commercial Broker
    Replied

    @Nicholas Cavato

    I am a little concerned with some responses here. The arguments for FHA versus conventional are fine and all, but one thing to be absolutely clear on is that Fannie/Freddie nor any other agency does NOT lend to entities. No lender will be able to close an FHA or conventional loan under an entity. Won't happen, no way in hell. Fannie does have a guideline that allows a property to be deeded over to an entity so long as the original borrower is also in the entity, but you have to wait 6 months of seasoning and maintain continuity of ownership.

    Almost every single one of these loans also comes with an Acceleration Clause (Due On Sale Clause) that allows the lender to call your note due should you violate the terms of the note or guarantee.  To be fair, I've never actually met anyone who says they've had a note called for this, but it is clearly in the loan docs and is the right of the lender to do so, should they choose.

    Cheers!

    business profile image
    Belsky Mortgage, LLC
    5.0 stars
    13 Reviews

    Loading replies...