Mortgage Options under an LLC versus a Private Purchase
Question: My partners and I just established an LLC partnership company. I’m hearing mixed information from banks regarding the types of mortgage loans available to us under the LLC for the purchase of non-owner occupied rental property (1-4 family).
My questin is this…
Do we have the same 30 year, fixed interest rate mortgage options available to us under the LLC as we did as private, individual purchasers or have the rules changed under the umbrella of the LLC? If they’ve changed, how so (i.e. what are the standard lending option/terms under an LLC)?
Answer: For purposes of liability protection could you do the following: 1. Buy the property as and Individual 2. Lease the property to you own LLC for managment and actually use? – Guarantee that your LLC will pay the expenses incurred personally for ownership of the property? Most securitized/conduit loans ($3,000,000+) MUST BE in single purpose/asset entity and the LLC is the entity of choice. Therefor, every asset/property is in an LLC and there is absolutely no difference in the rate or term of the loan because of the entity/borrower. Carry the mortgage in your name. The LLC pays the bills. Quitclaim the deed to a land trust. Make the LLC the beneficiary of the land trust. Make yourself (for some definition of “self”) the trustee. Do the paperwork with the mortgage company if you wish.
Re-quitclaim the deed back to yourself to refinance, if necessary.
Obtain a banker who understands your needs and is willing to work with you. Mine is quite up-front with me that as long as 75% of the rent covers the PITI, I can write as many mortgages as I want at not much more interest rate than owner-occupied.
I don’t buy properties that don’t meet those criteria during year one.
Related Posts
Filed under: Mortgage Question
Leave a Comment
XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
TrackBack URL | RSS feed for comments on this post.