Need help around buying rentals in my name or an LLC

[Tyler Dennison]

Hi Everyone,

I just wanted to touch base on a subject that has been causing me some confusion when talking to financial institutions. I am starting to pick up rental properties but wanted to put them under a company name or LLC. The issue I am having is when I have is when I talk to the banks and they hear LLC they want to be under commercial lending which has much higher rates and very short term loans. Can anyone provide some guidance on the best strategy to handle this situation? I have heard horror stories about taking properties from private ownership and transferring into a LLC (maybe a different kind of incorporation is required). Want to lock in that 30 year residential rate. I appreciate any and all help on the topic. Keep rocking.

Tyler

[Rick S.]

@Tyler Dennison you typically have to purchase the property under your name and then transfer the deed to the LLC name. We went through this late last year as our bank would not allow the loan to be in an LLC so we had to use our name. It really wasn't too bad as we had a lawyer file the transfer after it closed. Using a quit claim deed or warranty deed are the options I hear the most.

The main item you have to watch out for is the due-on-sale clause in your loan where the bank could call your loan if they find out about the transfer.  While that is not common, there are people on BP that it has happened to.