Getting Conflicting Advice from Lenders

[Jeremy Bohnett]

Hi all! I am looking to partner with someone in building an REI portfolio in Arkansas, and need some help on how to go about the lending process.

We have posed the below questions to a few lenders, and have received conflicting advice. So...I figured I would take it to BP to hear from you all:

1. How does a joint loan (meaning my business partner and I are co-borrowers) work? What is the process?

2. After we obtain a joint loan, would we be able to transfer the loan into an LLC or would a due-on-sale kick in and cause the loan to be called immediately?

3. If the due on sale clause would be an issue in that scenario, would we be able to open an LLC and secure a conventional loan under the LLC?

4. If the answer is yes to both 2 and 3, what are the pros and cons to each? I.e. Is the interest rate or terms the same for both?

5. Is there a seasoning period with most loans? What is the typical seasoning period length?

Interested to hear others take on this. If you don't feel like answering all the questions, would love to hear what you recommend we do. Obtain a loan outside the LLC and transfer in? Obtain a loan through an LLC?

Thanks so much for your help! 

Cheers,

Jeremy

[Jay Hinrichs]

Originally posted by @Jeremy Bohnett:

Thanks @Scott D Burrows, @Jay Hinrichs and @Chris Mason for your help!/advice!

I'm certainly aware of the hundreds of threads on LLC's, partnerships, and loans.

The challenge is that it seems like everyone has a different opinion on the matter. Some say it won't be problem transferring a loan into an LLC and others say that's too risky. Some say securing a loan through an LLC is a viable option, others say it's not. Some say holding properties within an LLC is necessary, others say it's not.

Don't want to get too held up on stuff like this and have it prevent me from taking action, but also want to be sure I'm setting a solid foundation.

for a mom and pop landlord there is no reason to need and LLC just have good insurance .. LLC is not asset protection anyway in the real world I don't care who tells you other wise.. if you have a major issue they will sue you personally anyway.