Most homeowners are familiar with the process for conventional mortgages, so they call up their mortgage broker as their first and only plan. Hardly a risk most business owners are willing to take. But if they do, they can call the loan (demand you pay the entire balance immediately), because you violated the “due on sale” clause. It could theoretically work - if the lender never finds out that you transferred ownership. They buy an income property under their personal name, take out a conventional mortgage, then try to get liability protection by transferring the property title to a single-member LLC they own. Some property owners try to get clever with their real estate portfolio. Transferring Ownership After Taking Out an LLC Mortgage To get several quotes from conventional lenders for a rental property LLC mortgage, compare personalized rates at Credible. They’ll also pull your credit report, so if your credit isn’t tip-top, start working on building your credit fast. But for a first rental property, getting a conventional mortgage for an LLC can work just fine.Īs mentioned above, conventional mortgage lenders usually require income documentation. Not to mention that having that many mortgages reporting can ruin your credit. That’s a problem, because conventional lenders typically only allow four mortgages reporting on your credit report. Second, they will almost certainly report the mortgage on your credit report, despite the loan being under an LLC. That goes doubly if you’re self-employed (see these options for financing rental properties when you’re self-employed.) But it comes with some caveats.įirst of all, conventional lenders don’t love writing mortgages for LLC rental properties, aren’t designed for it, and often make it difficult for you. Yes, business owners can get a conventional mortgage loan under an LLC name, and often for affordable interest rates. They all come with their own pros and cons of course, so make sure you understand each before applying. You have a few options when taking out a mortgage loan for an LLC. Options for a Rental Property LLC Mortgage
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