Originally posted by @Rodney Kuhl:
I invest in Indianapolis, and I am closing on 2 more rentals in the next couple of weeks. I have been working with a great lender and I have been able to lock in low 30-year rates, which is definitely a great thing as I see rates climbing over the next few years. However, they only lend to individuals, so the loans are in my personal name. If I wanted to switch the title over to my LLC to provide more protection to myself, what effect would this have on the loan? I'm guessing the lender could act upon the due on sale clause, so is there a way to avoid that risk?
Rodney, if you want to grow big, stop getting loans under your own name! I stopped doing that in 2006 when I wanted to build my dream house and needed very large loan. I had 6 properties under my personal name in 2006 and to qualify for a large loan I had to put 50% of the loan amount that I was requesting into reserves with the bank.
From 2006 through 2014 I bought/fixed/sold close to 100 residential properties and completed over 500 projects and all loans were given to the business, not me.
However all local banks still make you to be a personal guarantor on all business loans. You will not find a large bank that will give you a loan under your business name. Get a list of all local banks from the department of commerce in your state, and call all of them. This is what I did 8 years ago. Or search what other flippers have done in your area and under property tax' records you will find mortgagee's information (bank's name who originated a business loan) and then call that bank.
No large bank will allow you to transfer deed/title from your personal name to your company's name, but people do that anyway. I have never seen the bank calling a loan due if the payments are current.
I have transferred title ownership multiple times, yes it does trigger due on sale clause. And if somebody tells you that you could create a trust and put it in escrow, and have other party becoming a new owner of the trust so the bank could not find that out, this is ALL not true. I studied this topic before. You can take your mortgage documents and read only one page that describes ''due on sale'' clause.
To transfer property from your name to llc, you will need to file a quit claim deed with the county. Any attorney can do that or title co.
Back to your mortgages, I know that you get a better rate by having a mortgage under your own name than under the business name, but please do not make mistakes that people made that did a lot of deals. We get 5 year term, 20 year amo loans from local banks at 4.59% , 75% LTV, but after 5 years we contact the bank and it extends the loan for another 5 years.
In 2006 when I got my first business re loan, the rate was 8%, now it's 4.59%
