"we dont lend to LLC"

[Joe Geist]

hello BP

I have saved those hard earned dollars and my wife and i are ready to get our first rental property. In performing my research and attempting to get my team lined up i have started calling banks to inquire about financing. I am going to form an LLC for protection and was seeking traditional financing 20-30% down. Unfortunately i seem to keep getting the same answer ( we don't lend to LLC). I hear about people buying then moving the asset into the LLC but i am concerned about the "due on sale"..... Any in sight would be a great help!

[Steve Vaughan]

You are smart to check with lenders first @Joe Geist.  In the name of 'asset protection', you won't qualify for that sweet long-term, fixed rate, low DP financing a person can get.  You will probably find hazard insurance to be more expensive and limiting as well.

A business has to get business financing. Usually in the form of a commercial or portfolio loan. Shorter terms. Callable. Adjustable rates. Higher DPs. A big reason I don't put little houses with debt inside an LLC.

A transfer after the fact will violate the DOS clause and may cause problems with your title insurance and hazard insurance to boot.

I do put my commercial 5+ unit apt assets inside LLC. The lenders and insurers expect that. Good luck and keep doing your research!