Obtaining first Rental Property Financing

[Rob Landis]

I'm new to RE Investing, but looking to start making offers on potential properties. My real estate agent informed me that in order to submit offers I must first get a preapproval letter. I went to a local bank and explained to them I'm looking to get preapproved for a mortgage on a rental property investment. I told them I will need to be able to transfer the property title to my LLC. After going through the preapproval process, my lender informed me that his group will not give out loans to rental properties where the title will be under an LLC because of the Due on Sale clause. He then sent me to their commercial loan department. The commercial side will provide a loan, but only in the form of a 5 year ballon on a 20 year amortization schedule. My questions are:

1. Is there any way around a Due on Sale clause so I can finance my first property under a convention 30 year loan? Maybe looking at a different bank/credit union.

2. What are the risks associated with a 5 year ballon other than the potential for rates to increase every 5 years?