This question comes to us from a local mortgage banker in Santa Rosa, CA.
Q: If someone wants to buy a rental property through their LLC, can they also get a loan directly in the name of the LLC?
A: The short answer is yes.
Many residential banks and mortgage lenders will not write the loan agreements directly in the name of a corporation or Limited Liability Company (LLC). You will find that residential lenders (home loans) are usually made to individuals; not companies or family trusts.
You can try contacting a commercial mortgage lender to find out what their guidelines are based on your scenario.
If you find that you cannot meet the credit requirements for a commercial bank or lender, then private money financing may be the solution for you. Since the transactions are mainly based on equity, a private money lender will look at the overall picture of the deal itself in approving your loan request.
You will also need to provide a copy of the Operating Agreement and other documents as requested by our investor(s) or the escrow company to prove that the person signing on behalf of the company is authorized to do so.
One last note: if you are considering purchasing real estate in California through an LLC, it would be wise to consult with a real estate attorney and a tax professional to ask any questions you may have about potential liability and taxes based on your goals and objectives.
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