Applying For Mortgage - LLC Or Me?
Hi! I have found an investment property I like - my first - and have made an offer. I subsequently filed paperwork to form an LLC. If my offer is accepted, I will look for a mortgage, but there are no assets in my LLC. Would I apply for the mortgage as an individual? If so, how do I place the property under the LLC? Thanks!
There will be a big road block in your attempts to get financing using the LLC. Namely, there is a lack of assets, a lack of credit history, and no income history. You can eventually get credit through the LLC, but you will have to go through the steps to build all of these things, just like you had to do personally. You could put the property into a trust, and transfer beneficial interest of the trust. technically this will create a situation that would allow the lender to excercise the DOS in the mortgage, but it makes the transfer of title a little more transparent than just signing the title over to the LLC.
Good luck,
Jeff
What if he personally guarantees the debt? Would the bank put the mortgage in the name of the LLC in that situation?
Gordon Jones
That would be the absolute minimum lender requirement if he were able to find a lender that would be willing to do this.
I guess I am having trouble seeing how to use the LLC initially. When I purchased my residence, I applied for the mortgage in my name, and the title was transferred to my name. Now I can apply for a mortgage for this investment property, again in my name, but I don't understand how I will get the property title into the name of the LLC before I want to lease it to someone. This may be very basic, and I may just be obtuse, but I just don't get how to even start putting assets into the name of the LLC.
I too was eager to get my newly formed LLC into play, but found it to be a bit of a hassle. Since my exposure isn't so high yet, I decided not to worry about it for my first few deals. After having trouble getting insurance for a property I bought in my LLC's name--the liability consequences cut both ways--I just quit claimed it back to me for convenience.
My point is there'll be time to get your LLC into play. I'm not saying don't do it now, just that if you do, you'll be incurring extra work and possibly extra expense.
Hey whats up,
Investors that i broker mortgages for buy properties in their "personal" name ie.. themselves or their spouse etc.. then they run all of the money transfers like rent, mortgage, repairs etc.. through the LLC business account to build activity on the account, then after a couple of years go to the bank that you have the business account with and apply for a business loan/line of credit or whatever to do your RE business exclusively through the LLC. Hope this helps
Many thanks for the excellent advice, colleagues. I was having trouble visualizing how to get from point A to point B.
There are stores like Staples that you can build you corp credit by appling for credit card thru them and most of the time will let you put the credit in the companies name.
It's like going to Sears to start your personal credit.
You have to start somewhere, and it may take a couple of years before you corp. credit history is taken serious