Marquette, MI asked in Real Estate Law for Michigan

Q: I own a rental property under a personal mortgage which prevent me from getting another mortgage for a personal property

Would making this a business resolve this issue and would an attorney be able to assist with this process

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2 Lawyer Answers
Kenneth V Zichi
Kenneth V Zichi
Answered
  • Fowlerville, MI
  • Licensed in Michigan

A: Probably, but there are several 'complications' that need to be considered before you take action. First of all, be aware that most PERSONAL mortgages are for principal residences only -- if there is a provision that says 'personal residence only' in there, you may ALREADY be running afoul of the loan terms. This could place you in jeopardy.

There are other considerations such as incorporation or LLC formation that should be considered, and ALL of this will impact your taxes, so it behooves you to consult with a local attorney who does both real estate and corporation work to insure things get done properly.

Seek local legal help ASAP!

--This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship. I am licensed to practice in Michigan only. Please seek competent local legal help if you feel you need legal advice!

David Soble
PREMIUM
David Soble
Answered
  • Farmington Hills, MI
  • Licensed in Michigan

A: I have been an attorney actively engaged in the lending business for over 25 years. Your question is very brief, but based on what I think you are asking, the conventional lending guidelines allow you to have up to 4 rental properties if you are taking a mortgage in the secondary market.

Notwithstanding this information, it is always best to hold investment property in a corporation. I regularly create these entities for real estate investors. Check out more by visiting www.provenresource.com

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