Route cashflow from personal property through LLC

2 Replies

On the Real Estate Rookie today (Episode 21), Felipe mentioned routing cashflow from his personal properties through his LLC to start building history to qualify for business lending down the road.

I am going through the process of forming an entity now, what would routing this cashflow look like? I have scoured google and BP but can't find an idea. Maybe I'm not using the correct verbiage.

I was imagining owning the property in my name but using the LLC as the property manager that collects the rent?

The concept of doing this is fairly simple. You sign a contract for your property, which you control, with the LLC, which you control, to manage the day-to-day issues of the property for $x per year.

That said, I would never do this for the hope of getting a business line of credit. (There are other reasons you might want to do this.) Spending money to set up and maintain an LLC for a tiny line of credit a few years from now probably has a negative ROI.

It would be for more than just a line of credit; I plan to use hard money and long term rental financing once I am past the limit for personal mortgages. Is there any benefit to building a "history" if all of my properties have equity, cashflow and my personal credit is sufficient? I'm not sure what lenders look at when dealing with entities.

My naivety tells me that if I form an LLC on the 10th and go to a bank for a business loan on the 15th that there would be some resistance.

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