Should I form a LLC right away?

Question

Steve Vaughan · Answer

A target on your back because you have FU money!

John Spina jr · Answer

@Carrie Albertson I have not done a deal yet, but I am doing my homework for when I'm ready. From what I've read and have heard from the BP podcast, it's easier to put it into an LLC now rather then rolling it over into an LLC down the road. I've also heard of a local investor that puts each property into its own LLC. Hope that helps and anyone agrees or has some other insight please add to this. Good Luck.

Steve Vaughan · Answer

I don't bother for little residential property with debt.  Too hard to get loans.

Unless it's a commercial property, you are rich or you are famous, I wouldn't.

I'm neither, but do have LLCs for my 5+ unit apts.  Hope this helps @Carrie Albertson!

Dalton Osmanski · Answer

Having an LLC purchase a property tends to require a large down payment so if you're going the low down payment route this might not be the best option. LLC's are incredibly important due to the vial of protection they offer investors so you should consider every outcome in your decision making.

Carrie A. · Answer

@James Triano

Thank you for the info!  I've decided that I probably won't worry about a LLC until the property is paid off!

James Triano · Answer

@Carrie Albertson

This will depend on your financing.  For a Duplex, you likely won't be able to go for a commercial loan.  If you're doing conventional financing, the bank will more than likely not allow you to do have the property in a separate entity.  This is because the loan underwriting is being done on the property value and your DTI ratio.

However, if you're paying cash or doing some sort of private financing, putting the property in an LLC will be a good way to go.  Obviously there are a lot of "if, then" statements in here but it can be a bit complicated.

Ryan Evans · Answer

If you're not using traditional financing it seems the main perk of an LLC is the LL part. If you've got other assets to protect, then sure. But if you're bank financing the property it might not be an option. Not that I know much about bank financing, though. I don't qualify for the whole stable employment thing.

@Steve Vaughan that's the dream ey? FU money should really be everyone's goal! haha. Not to hijack the thread, but I see you're in Eastern WA so I'd love to hear your thoughts on an idea I've got for a place in Leavenworth... https://www.biggerpockets.com/forums/530/topics/472419-should-i-build-a-tiny-cabin-as-a-str

Should I form a LLC right away?

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