I know there are plenty of questions about this topic already, but none of them exactly speak to my situation, so I'll pitch mine out as well.
Let me also preface this with the fact that I am seeking council from my attorneys and mortgage brokers, so I am not basing any decisions solely upon input here. I am interested in the variety of experience and wisdom that Bigger Pockets beings to the table.
I have recently formed an investment company (LLC) with several family members (grandfather, parents and sister) in Georgia. The family has experience with rental property and I have pretty extensive legal and business experience, so I generally think of us playing on the "Big boys and girls" program, so I am interested in candid, informed opinions on the situation.
We have two multi-member LLCs which currently have no assets, but will be funded with cash from different members. One company will be used to hold properties. The second will be a property management company which will bill the holding company for property company for its services, collect rents and disburse payments back to the holding company.
Having not used LLCs in a real estate setting before I'm a bit confused and discouraged with all of the different opinions I'm hearing here. It sounds like I am faced with two ways to get properties into the LLC. 1) Buy properties for cash in the LLC's name then try to take a mortgage out against the property. I'm told this will necessitate a commercial loan which is probably in the 9% range in my area, right now. (not desirable). 2) Finance and purchase the house in my name and then slide it into the LLC, risking triggering the "Call on sale" clause of the mortgage (Also undesirable).
Am I indeed stuck between a rock and a hard place here? Is there a third option or a way of working one of these two options to a more desirable outcome?
I hear the inefficiency of an LLC in terms of a single-member LLC or if you are only going to hold a property or two. I have a multi-member LLC and we are looking to purchase a large number of properties, so I feel pretty strongly about the chosen legal structure.
Can anyone breathe some wisdom into my situation? experience with how to get started out structuring such a real estate investment company? insight/experience on getting property inside the company?
In your initial set-up, I thought you were going to be looking at commercial properties or multi-family (apartments of 5+ units, not multi-unit single family). That is the sort of LLC structure you would want on a syndication. Then you went on to describe problems related to owning single family properties.
Instead of buying a lot of single family, you may want to look at stepping up to bigger properties. Even if you look at small multi-family (say a 8-15 unit apartments) that is a great structure for managing those types of properties.
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