Loan in personal but owned by llc

[Ron Mussatto]

How are investors getting conventional loans (for the better interest rate) since they need to be in personal name and still be protected from liability? Is it typical get loan in personal name and the property be titled in LLC? Does this provide protection?

[Jake Hottenrott]

@Ron Mussatto - Great question! A lot of times people jump into having an LLC before they even get a property, then they feel compelled to use that LLC but get scared off when banks tell them higher rates on a corporate loan. Next what happens is where a lot of investors get lost. They go back and buy the house in their personal name and plan to quitclaim deed it to the LLC. One of two things happens: they forget to do it, so they don't have the LLC protection OR they do quitclaim it over and they have triggered the due on sale clause in their mortgage contract. While the chances of this being called are probably low, it's still a possibility. I did a blog post a while back on when to set up an LLC. My personal preference is to get as many properties under your name as you can at those better rates and then get a large personal umbrella policy to mitigate your liability risk. Once you've hit the max, start that LLC and keep the fun going. Here's the link to the post:

https://www.biggerpockets.com/member-blogs/5926/53215-questions-as-common-as-the-cold---llc

Good luck!