How to Deed a Property to Satisfy Bank and LLC??

[Chris Presnell]

Hi All,

After being involved in purchasing approximately 12 SFR over the past 10 years, and listening to hundreds of real estate podcasts, there is one question I have never heard addressed in any detail. I'm hoping the experts on BP can help me out. So let me explain...

Everyone talks about buying properties in your personal name to get the best financing (30 year fixed ,lowest rate), then deeding the property over after closing to a LLC for asset protection. We have done this for a few properties, then proceeded to claim all the revenue and expenses through the LLC. I would assume many of the BRRRR investors are doing the same. The problem this seems to create is you now have a mortgage in your personal name, but are not showing any of the associated revenue on your personal tax return (it is all being shown on the LLC). This would seem to create a situation where each property drives up your debt to income ratio, making it harder to ultimately qualify for the 10 conventional mortgages that are allowed. We have a 2 person LLC, and after financing many of our properties directly through our LLC using 15 year mortgages, we are now interested in maxing out our 10 30 year mortgages while rates are so favorable, but we really have not found a good answer to this question.

Does anyone have any suggestions or best practices around this topic? It has been frustrating to hear all the talk about BRRRR, yet no one has ever addressed this particular financing issue.

Thanks in advance

Chris