I have some basic LLC strategy questions. I appreciate any input or resources you can direct me to. Thank you!
A quick background on my situation to preface my questions: I own two duplxes with mortgages on each one in my personal name. I intend to buy more duplexes with traditional loans, however I have had interest from various people about investing their money in my (evolving) real estate business. This leads to my two questions about LLC strategy.
I want to create a company that I would be able to present to potential investors. If I do create that company in the form of an LLC should that entity actually hold the properties that I (and my investors) will purchase? Or should it just be the face of the business while individual properties are held in separate LLCs?
I cannot have my current properties held by an LLC since they are financed by traditional mortgages in my name. From what I have heard I would need to refinance, put 25% down, and personally guarantee the loan anyway to get it in an LLC. That being said, should I create an LLC for property management and use it to advertise, collect rents, etc?
What has worked for you and what would you recommend? Thank you!
@Nicholas Zeiler Your LLC is your company...single member it sounds like and the face of the business. Investing with others will be cleaner with a multi-member LLC and probably originating a note/mortgage as the security instrument for your investors. If you want a good and reasonable attorney, let me know and I'll make an intro...doing a couple of these right now.
You can transfer title from your personal name to an LLC at any juncture with a warranty deed...pretty simple stuff. But I would say consider talking to your insurance agent first about an umbrella or rider...having properties in an LLC doesn't really release you from liability...at least not how most folks think it does.
As far as an LLC for collecting rent...this can be your main LLC...all of our tenants direct deposit rent to our business checking...we have a separate "share" account for each property so all activity is attached to the property account...checks for each property and bank card for each property...fairly straightforward. Opening a business checking will require an EIN and LLC articles with an operating agreement...plus whatever else your lender requires...
Best of luck
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