Many investors hold each rental in its own limited liability company. The idea is to keep the liabilities of one property from reaching the rest. Conventional lenders often will not lend to an LLC at all, which leaves investors choosing between the structure they want and the loan they can get.
DSCR lenders do this every day. The borrower on the note is the LLC. The owner signs a personal guaranty in most cases, so the structure protects you from claims against the property, not from the loan itself.
Who this loan fits
- Investors who hold each property in a separate LLC
- Owners who want to move properties out of a personal name
- Partners who own a property together through an entity
- Anyone building a portfolio who wants clean records and clear separation
What an LLC does and does not do
An LLC can shield your other assets from a claim that arises at one property, for example a tenant injury. It does not erase your obligation on the loan if you have signed a personal guaranty. And an LLC is only as protective as the way you run it. Keep a separate bank account, sign contracts in the entity's name, and keep your records tidy.
This is general information and not legal advice. Talk to an attorney about the right structure for your state and your goals.
Moving a property into an LLC
If you already own a property in your own name, transferring it to an LLC can trigger the due on sale clause in an existing mortgage. Refinancing into a DSCR loan in the LLC's name is a common way to handle the transfer cleanly, since the new loan pays off the old one.
Series LLCs and trusts
Some borrowers hold property in a series LLC or a trust. Programs treat these case by case. Send us the structure and we will check with the lender before you spend money on legal work you may not need.
What an entity file looks like
- Articles of organization
- Required
- Operating agreement
- Required
- EIN letter
- Required
- Certificate of good standing
- Often required
- Guarantor ID and credit
- Required
Document lists vary by state and lender. Your specialist will send an exact checklist.