Transfering Rental Properties to an LLC to Free-Up FNMA Financing

[Billy Raz]

Howdy –

I have 1 rental in Dallas, and 9 rentals in AZ.

All of the properties have FNMA financing and therefore, I’ve maxed out the 10 financed properties with FNMA.

I would like to continue obtaining FNMA financing, so the question is this:

Can I transfer any of the these properties into an LLC (that I would need to create), in order to free-up more slots for additional FNMA financing?

If not, are there any alternatives you could recommend?

I’m in contact with a commercial lender who has given me a reasonable quote for additional loans, but obviously I’d like to procure more FNMA backed financing if possible.

Thanks in advance for your help.

Billy 

[Lee Huffman]

You may still run into issues, even with a portfolio loan. The rules we've come across is that, if you're a more than 20% owner of the LLC, the mortgaged properties still count against your overall 10 property max.

Before you proceed forward, talk to a mortgage broker and run your proposed scenario by him to see if that would be ok.

One way I'm working around it when I hit 10 properties is that all of the mortgages (rentals and primary) are in my name only. The next 10 will either be in my wife's name or my partner's name. This way we can have 30 mortgages before we hit the cap.