Investing in the Cleveland market and will be buying a duplex in the near future. How I can protect my assets? I am growing a real estate empire so eventually I will have lots of various assests but I am starting small with a duplex and building from there. From my understanding, banks won't loan to an LLC on single family, duplex, triplex, or four plex. Any advice?
Most conventional banks won't lend to an LLC (some do, but with extra fees/points). But an alternative would be going through with a Hard Money Lender as they would lend to an LLC.
@Emily Schultz EMPIRE! I like the sound of that! I have a bank contact who may be able to help. If not, I also know of some hard money lenders who you could talk with as @Damian Ramirez suggested. Happy to discuss further if you're interested.
PS. Hi Damian! How are your projects coming? Shoot me an inbox!
@Emily Schultz. I have all my properties titled in an LLC but over the years have questioned whether its worth the trouble. It is more challenging to borrow under an LLC name, especially when you are just starting out and you are going to pay a higher interest rate and typically need more cash equity. I can't represent myself in an eviction proceeding, need an attorney because of the LLC. You can get high liability coverage or a blanket liability policy to offset the risk of something extreme happening at one of your properties. With an LLC you have to be really cognizant about keeping everything separate and good records - which you should do any way but with the LLC if you miss something it could cause the LLC to be disregarded some day which then could put assets you have other than the property itself at risk.
Speak to a lawyer and insurance agent about your specific situation and get their advice on the best way to protect yourself.
Emily Schultz you are building a real estate empire yet asking for advice from us? I personally would like to learn from someone who is building an “empire.”
@Emily Schultz, Banks will lend to an LLC, but it will be a commercial loan instead of residential. The interest rate will be 1-1.5% higher, which is likely insignificant. An easier way may be to keep the property in your name and purchase an umbrella insurance policy for liability protection. As you build your empire, you can continue to add additional properties to be covered by the umbrella policy. There's no wrong way to do it. Don't let it slow you down as you build your empire!