Looking to start investing in real estate.

Looking to start investing in real estate.

Middlebury, VT · Member since 2014 · 14 posts · 2 votes

Hello all!  I'm new to this site and am very excited about making some connections and learning from others who have had success.  

Myself and a few others are looking to start buying rental properties in our area to fix up and then rent out. What is the best structure to set up in order to purchase different properties? I've read a lot and am assuming that for each property, we should form a different LLC to limit our liability. My other questions is a bit more tricky to explain.

Can a LLC be comprised of not only individual members, but also another LLC? Basically, my brother and I have formed an LLC. He works for a financial institution across the country and provides some of the financial support. We would be partnering with another individual who would be doing the work on the property. So can our new LLC that is formed to purchase the property, be owned by this other individual and also by the LLC that my brother and I have? Sorry if that's a bit confusing. Thanks for any help!

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    11y

    @Jamie McKenna 

    First off welcome!!!

    I dont think you need to worry about an LLC, if protection is what you are after then make sure you have plenty of insurance, get an umbrella policy to add additional coverage from the basic coverage you will get.

    Do not get a new LLC for every house you purchase. You will most likely not get any financing as a bank wont make a loan to your LLC.

    Think of how expensive it is, $X amount to form it, $X amount to renew yearly and $X amount for your CPA to do a tax return ( on each one ) !!!

    This is my opinion, good luck

    Curt Davis - KAIZEN Realty538 Reviews
  • Middlebury, VT · Member since 2014 · 14 posts · 2 votes
    11y

    Curt,

    Thanks for the quick reply! That's some good feedback. I've always heard that a separate LLC is best so that if a tenant from one of your properties sues, he/she can only go after that one property. Having the the right insurance and umbrella policy should be able to cover any issues that come up though.

    Our biggest hurdle right now is figuring the financing. Do you have any suggestions for the best way to obtain the financing? Do LLC's qualify for FHA loans? We would like to put down as little money as possible. Thanks again!

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