Conventional Loan Strategies with Partners - JV/LLC Issue

[Mehran K.]

Hi all, question on an issue I'm encountering:

Back Story: 

I originally contact my portfolio lender (who does conventional FNMA/FMCC loans as well), to ask if he does 30 year conventional loans to LLC's with personal guarantees. He said YES, so I went ahead and formed LLC's with 3 partners, had operating agreements drawn up by a lawyer (which wasn't cheap!) and even already opened up a business bank account with one of the partners. A big benefit of these partnerships is locking in the 30 year financing.

We got everything setup with the first partner and went to start the pre-approval process  and the lender tells me he can't do it, saying he thought I was talking about the portfolio product. 

Now I'm in a situation where I have entities setup with solid operating agreements, yet we can't take the loan or title in the LLC.

My thoughts on options we have: (while still pursuing conventional financing)

1) Have partner take the loan out in their personal name, we take title in BOTH our names. We collect rents and everything in the name of the LLC and deposit them in the business bank account. We use the operating agreement as a guideline on how to do operations.

Thoughts: Everything may work out tax-wise. But I'm concerned about not having anything actually binding as far as ownership % and profit/loss that is part of the operating agreement. These partnerships have varying ownership and contribution %'s (other than 50/50) so it's important we have a binding agreement in place.

Is there a way my lawyer can draft a document that would be able to keep everything kosher to our LLC, even though we don't own the property in the LLC name? 

2) Partner takes loan out in their personal name, takes title in their personal name, later down the line deed the property to the LLC.

Thoughts: Obviously have to worry about the due on sale clause. Any other concerns/thoughts about this?

3. Scrap the LLC, have a JV partnership agreement drafted. This way we can operate in our own names and still have legal agreements for operations.

Unfortunately my lawyer just went on vacation for 2 weeks and I'm looking to hear everyone's take/advice on the situation! This is all in Wisconsin by the way. Thanks so much in advance, I appreciate it.

I'm going to tag a few people I know have probably encountered these situations :) @Bill Gulley