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Rafael, Home Buyer in Austin, TX

Looking for a lender/broker that will lend against an LLC to purchase rental properties.

Asked by Rafael, Austin, TX Mon Jan 5, 2009

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6
Tom, the problem with deeding after closing is that that may trigger the "due on sale" clause. The lender would have the right to collect the entire mortgage amount immediately, because the property is the collateral "mortgaged" (promised) to protect the lender. If the owner deeds it away, there is nothing to protect the lender.

Rafael, there are some lenders who will lend to a company, but they require either that the company have a history (P&L) that shows they are legitimate and know what they're doing or that the principal provide a personal guarantee of the loan. Sometimes, they require both. Companies with no assets other than the property you're buying would not satisfy most lenders. If your company has done this for the last few years and now owns a couple of other properties that have equity, then the bank will be more receptive.

Also, as investment properties, not owner-occupied, the bank will lend with a lower loan-to-value ration, typically 75-80%, although I have seen some at 90% not too long ago. If you're new at this, get started first and then look to move the assets into a LLC. In the meantime protect your personal assets by getting an umbrella liability policy. Once you have established yourself as a viable rental business person, then open your company.
Web Reference: http://www.Mortgages-TX.com
1 vote Thank Flag Link Tue Jan 6, 2009
Rafael,

You've gotten some great responses here (especially from Mr. Sumner). I can also add that I successfully had a closing where my clients purchased investment property through their LLC and the bank was fine with that. However, that was over 2 years ago, but it has happened, but it was also only allowed by personal backing by one of the principles (qualifying of course). We've also been told by numerous other title closers and investors that they do transfer ownership into the LLC post closing, but how they do it I am not quite sure while getting around the "due-on-sale" clause that Mr. Sumner referred to. However, when they did it, it was usually on a flip anyway and by the time the bank would have figured out, the property was more than likely already sold and they moved on to the next deal. The bank that worked w/ my investors was Gold Financial. I don't have a contact for you, but I'm sure you can find them on the internet.

God Bless,
Josh
Web Reference: http://www.eXposedHomes.com
0 votes Thank Flag Link Tue Jan 6, 2009
Deeding after you close will cause 2 pontential problems,

1. You have to pay transfer tax again (depending on your state)

2. Your deed will not match your mortgage, depending on your lender; they may have a huge problem with this

Most, if not all large lenders have discontinued this program. Check with you local bank in the neighborhood the house is located. Some smaller banks will offer these at 70-75% LTV.
0 votes Thank Flag Link Tue Jan 6, 2009
Hi Rafael,

My firm may be able to assist you, however provide more details and a phone number for a consult. Send me an e-mail @ mattye.smith@vrimail.com.

Best regards,

Mattye P. Smith
Realtor

American Realtors
0 votes Thank Flag Link Mon Jan 5, 2009
What is wrong with deeding the property over after close?
0 votes Thank Flag Link Mon Jan 5, 2009
Your best bet is to meet with a local and trusted mortgage company, try and avoid internet lenders. They will be able to provide you with a list of potential programs in your area that may suit your needs. Most of the programs are requiring you to sign personally however there are programs that will allow the llc to sign without recourse if teh credit and finacials are in order. good luck with your search.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Jan 5, 2009
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