how to get mortgage on llc [Beginner's Guide]

Last updated : Aug 26, 2022

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hi this is the business guy so can you get a mortgage in an llc and if so how do you do it we're going to answer those questions very directly and then i'm going to interview a good friend of mine who's been in the mortgage business for nearly 30 years and he gives mortgages to llc's on a regular basis and he'll tell you exactly what you need to do we'll also talk about the benefits of owning property in an llc such as protecting your assets from lawsuits and on this channel we do our best to get right to the point provide maximum value in little time so if you could help me out by clicking the like button below so youtube promotes it i'd really appreciate it and if you haven't already you can also click the subscribe button below so that when more videos come out like this you'll be up to date right away so what are the options for getting a mortgage in an llc and who am i to talk about this topic quick background i bought my first investment property in 1986 have been involved in hundreds of real estate investments was a full-time public speaker teaching real estate investment seminars have been the ceo of a company that sets up corporations and llc since 1991 and have been in the real estate lending business so believe me i know a thing or two about getting mortgages in llcs you have a few options when taking out a mortgage loan for an llc and they all come with their own pros and cons of course so make sure you understand each before applying option number one conventional mortgage loans for llc's yes you can get a conventional mortgage loan under an llc name and often for affordable interest rates but it comes with some things you need to know first 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 and that goes doubly if you're self-employed second they will almost certainly report the mortgage on your credit report despite the loan being under an llc and this could be a problem because conventional lenders typically only allow for four mortgages reporting under your credit report they stop lending to you after that not to mention that having that many mortgages reporting at the same time can hurt your credit score but for a first rental property getting a conventional mortgage for an llc can work just fine and of course conventional mortgage lenders usually require income documentation they also pull your credit report so if your credit report isn't in tip-top shape start working on building your credit right now now let's talk about transferring ownership after taking out an llc mortgage some property owners try to get clever with the real estate portfolio they buy an income property under their personal name take out a conventional mortgage then they try to get liability protection by transferring the property title to a single member llc that they own it could theoretically work if the lender never finds out that you transfer the ownership but if they do they can call the loan due that is demand that you pay the entire balance immediately because you violated the due on sale clause so we found it's better to call us up and have us form a land trust along with an llc put the property into the land trust then we provide a separate piece of paper called an assignment of beneficial interest so if the lender wants to see the trust you can show them the trust with you as the beneficiary and the garn saint-germain act protects you from the bank calling that loan due then on a separate piece of paper you can assign the beneficial interest and the trust to the llc now the law makes me say this before you do it be sure to get legal advice we do have attorneys on staff who may be able to help option number two for getting a mortgage in an llc call a mortgage broker a great mortgage broker can be worth his or her weight in gold they can navigate around the time wasting research and turn downs and guide you directly to the loan that's right for you like i said i have a good friend of mine who i'd like to introduce you to now and can help you get a loan inside of your llc let's go ahead and listen in okay now we have bob zielinski he's the vice president of u.s mortgage and he does loans to llcs bob how does it differ between getting a personal mortgage and getting a mortgage on an llc what does somebody need to provide you very good question what we look for when you are applying for a mortgage and you would like to put the mortgage into the llc title name we would require of course the llc has to have been formed once we get the information that the llc has established i will need a operating agreement for the llc and i will need a letter of good standing for the llc from the state that the llc has been established in and you can then proceed we have a menu of mortgage products that you can put the title of the property into the llc and that is perfectly fine by us now let me point out to you there are certain loan programs that deal with for example fannie mae that they will not allow you to put a property title in an llc unacceptable but we do have a portfolio of mortgage products that will allow you to title the property in an llc name okay so what's the difference in procedure when somebody gets a mortgage and an llc compared to getting a personal mortgage as far as the procedures it doesn't take much except the establishment of the llc that's the biggest hurdle and of course providing us the other ingredients the operating agreement and the letter of good standing from the state on behalf of the llc okay so you're very willing to grant a mortgage in an llc and it's something that you've done before something that you do regularly correct yes that is correct now if somebody wants to get a hold of you and and apply for a mortgage through you for their llc how would they get in contact with you yeah so you can call me on my uh direct dial i'm available i hate to say it 24 7 but that's area code 954.415.30 okay and we'll go ahead and put that number down below so you can check for bob's number down below and also make sure to call him when you're serious when you're wanting to get a mortgage and you want to apply so make sure you're serious and not just curious bob's very willing to help you okay bob any any parting shots i thank you and i i am available uh to uh probe me for any questions regarding mortgages with llcs i'm more than happy to answer any questions that you might have so please reach out to me and use me as a resource yeah bob's a great guy i know him well and he's a very very helpful and i think you'll be very very happy with the results you get option number three portfolio lenders most homeowners are familiar with the process of conventional mortgages so they call up their lender as their first and only plan instead of doing that start thinking like a real estate investor and explore portfolio loans under your llc name now a portfolio loan is alone that the lender keeps in-house with their own portfolio rather than selling it off to the open market like conventional lenders now here are the plus sides of portfolio loans for ll

Thanks for your comment Nelda Sterlace, have a nice day.
- Dewitt Malool, Staff Member

hi this is the business guy how do you get a real estate loan in an llc i've been investing in real estate since the age of 23 and here are the eight steps to getting a loan in a limited liability company okay number one first thing obviously is you set up your llc you can give us a call and our attorneys and consultants can help you do that right number two you get an employer identification number from the irs as you may know you do that by filling out an ss4 form or if you want we can help you with that too number three you complete your corporate record book and this includes the operating agreement the minutes to meetings any of your membership certificates representing your ownership and this is a company record book that looks something like this number four after this you open up a bank account in the name of the llc now you do this because the law considers the llc a separate person from you so it needs to have its own account open it up throw a few bucks into it and number five you identify the property you want to buy and you make an offer with at least a 60-day closing and i'll tell you why number six since you have your account open the next thing you do is you put in enough money into your llc bank account to cover your down payment number seven you apply for your loan hopefully you've already contacted that lender in the beginning so you know all their requirements number eight finally you let that down payment season for at least two months which is why you give yourself a 60 day closing period if you don't you're going to have a hard time getting your loan later i'm going to show you an actual closing statement on a two and a half million dollar real estate purchase that i made how much money i put down i'm going to be totally transparent with you on all the figures i'm the business guy and we're talking about how to finance a property inside of an llc and if you're watching this video on youtube please take your mouse or your thumb and click the like button below so that youtube promotes this video thank you very much and you can also click the subscribe button so that when more videos come out like this you'll get notified okay so why must you do these things for example why does the down payment need to sit in the llc bank account for two months before they finance you you see underwriters follow very strict guidelines the global financial crisis of to 2008 was mainly caused by easy lenient lending practices lending to people who could not afford to repay the loans lending to people based on what they said they made rather than what they could prove they made i remember when i bought my first family home back in 1988 my wife and i bought a two-year-old home for 62 500 yeah if you can believe that it seemed like we had to show every scrap of paper we owned and pledge our first born child to get that loan i mean it was like torture by the way our interest rate was nine and a half percent then in 2005 when we bought a 1.7 million dollar home in california they said we could just get a loan by saying how much we made a year i mean we didn't even have to prove anything my job just about hit the floor so in response to the financial collapse from the lucy goosey lending standards the government enacted the dodd-frank wall street reform and consumer protection act on july 21st 2010. as a result underwriters are forced into tight little boxes of things they must see before you can get a loan again you can contact us to get your land trust and llc set up but don't call us about loans we're not freeinformation.com call a lender for that information now i bought a two and a half million dollar office building in california let's go ahead and take a look first of all i bought the property in a land trust a land trust for privacy of ownership and llc owned that was the beneficiary of the land trust and this is exactly as we teach on our videos okay now here's the actual closing statement on a property that i bought for about two and a half million you can see the price right here 2.449 somewhat change million you can see down here i put 75 000 down as earnest money then a month later after i approved the contingencies i added another 50 000 right here in earnest money so that showed yes i'm really committed to going through with this purchase i paid 225 000 from one company that i owned and then another 175 000 and some change from another company that i own for a total down payment at two hundred 525 seventeen dollars and twenty two cents they say wow where did you get that kind of money from and the answer is from other properties that i sold that went up in value and that's where the money came from in fact i just sold a property that i bought for four hundred thousand and sold for a million hey the first property investment i ever made was a mobile home wasn't even technically real estate i bought it for 1500 and then i sold it for 3500 about six months later so i started small and then you build up little by little and that's where i came up with this down payment you can see the quarterly association fees the lender fees and so on and you can see a bank loan from bank of america for 1.959 million and then you can see the other miscellaneous expenses to do the close and then in the end i had to come up with another five thousand one hundred and fifty three thousand dollars in order to close the loan so that was a property but a land trust took title to the property and an llc was the beneficiary of that land trust now in addition to the 2010 protections the consumer financial protection bureau also enacted new laws at the end of 2020 saying that qualified mortgages cannot include dangerous practices such as interest only so you never pay off the mortgage or balloon payments where you have to pay the entire balance at once hey that practice was great for mortgage-backed security investors who wanted their money back at a certain period of time but terrible as a loan consumer who has to pay let's say four hundred and seventy thousand dollars all at once in three years out there scrambling to refinance a loan now another thing to know about getting a loan in an llc is that you will be personally liable for the loan that is if you don't pay the loan it will affect your personal credit and that's why they do it if the bank feels the pain they want to make sure that you feel the pain personally and come after you personally in most states for any money they lose if they seize the property and sell it now there are some exceptions out there such as non-recourse loans that people can get for purchases in their self-directed iras but they are expected to pay higher interest rates and huge down payments okay now which documents do lenders need to finance a mortgage when an llc takes title in order to get a mortgage under an llc for rental property you'll need to demonstrate to the lender that you're running your llc like a real business so documents and information a lender will need when you apply for a loan under an llc includes your articles of organization the operating agreement including the information on all of the llc mem

Thanks Bennett your participation is very much appreciated
- Dewitt Malool

About the author

Dewitt Malool

I've studied symbolic interactionism at Webster University in St. Louis and I am an expert in criminology/criminal justice (outline). I usually feel discontent. My previous job was pharmacy aides I held this position for 10 years, I love talking about creative writing and quiz. Huge fan of Lana Del Rey I practice judo and collect insects.