Lender who allows LLC on Deed for Orlando STR

[Brandon S.]

I found a few properties in Windsor Hills that I'd like to make an offer on. However, I want the deed in my LLC and not in my name. Does anyone have local commercial lenders who allow this in the Orlando, FL area? To note, it would be used exclusively as an AirBNB STR.

[Parker Borofsky]

@Brandon S. check with your CPA and an atty but @Luke Carl is correct. From my understanding the LLC won't provide the protection that most believe it will and since you can use the QBI tax rule on a schedule E, there may not be a benefit tax-wise either, so double check that. I would recommend a good umbrella poicy regardless.

Small correction to the number of financed properties... you can have up to 10 financed properties to qualify for FNMA. For example, if you have commercial/FHA/VA/private mortgages in your name, it still counts as one of the 10. However, if both the mortgage and the property are in your LLC (okay if you and the LLC secure the mortgage), it does not count as one of the 10.

@Kyle Mccaw My feelings are crushed that you have the opinion that FNMA Freddie Mac are for mostly W2 income. Okay, maybe not crushed LOL. Sounds like you just need to talk to an excellent Loan Officer who knows what they are doing! I would say that easily 45% of my clients are self-employed (some with multiple businesses) and probably 70% of them are heavy investors with multiple rental proeprties. STR/LTR/Commercial etc... and I know the guidelines inside/out and how to calculate the effective income from these. Other LO's or company's may not know how to use projected rental income, I do and we can so I would say be careful swearing off Conventional due to bad experiences with LO's who don't know what they are doing! In fact, just yesterday I spoke to a client who was told he couldn't qualify for anything because they didn't know how to calculate his Schedule E and weren't using projected rental income, and I qualified him for $725K - he was very surprised!

@John Underwood it's actually not the mortgage company but the servicing company that would care about the LLC quitclaim, but it can be doable without having issues. Here is the link to the FNMA guideline for servicers:

https://servicing-guide.fanniemae.com/THE-SERVICING-GUIDE/Part-D-Providing-Solutions-to-a-Borrower/Subpart-D1-Assisting-the-Borrower-with-Property-Related/Chapter-D1-4-Transfers-of-Ownership/Section-D1-4-1-Information-Relating-to-Transfers-of-Owner/D1-4-1-02-Allowable-Exemptions-Due-to-the-Type-of-Transfer/1041300841/D1-4-1-02-Allowable-Exemptions-Due-to-the-Type-of-Transfer-11-08-2017.htm?touchpoint=guide

Here is the language:

Unless the previous borrower requests a release of liability, the servicer must process the following exempt transactions without reviewing or approving the terms of the transfer:

A transfer of the property (or, if the borrower is an inter vivos revocable trust, a transfer of a beneficial interest in the trust) to

• • a limited liability company (LLC), provided that
    • the mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, and
    • the LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).

    The servicer must notify the borrower that a property transferred to an LLC must be transferred back to a natural person prior to any subsequent refinance application in order to meet Fannie Mae's Selling Guide underwriting requirements.

For a mortgage loan acquired by Fannie Mae after June 1, 2007, if a servicer reasonably believes that a due-on-transfer provision is unenforceable by law or would not be enforced by a court, the servicer is authorized to approve a transfer of an interest in the mortgaged property or a direct or indirect interest in the borrower (if an entity), provided the servicer has notified Fannie Mae’s Legal department (see F-4-03, List of Contacts) of the reason for its belief and Fannie Mae has either sent a notice of non-objection to the proposed transfer or not responded within 60 days of its receipt of the notice.

The servicer must notify the applicable property insurance companies, tax authorities, the mortgage insurer, and any other interested parties when it processes a transfer of ownership.