Updated over 2 years ago on . Most recent reply
Creative financing and illegal LLCs
I am just looking for some clarification on a few things. I live in Colorado and have several LLCs formed in Wyoming for other businesses I have; it's very simple, safe, and cost effective to use LLCs and registered agents formed in WY. Currently I am looking to invest in Alabama, but the traditional lender I was speaking with about DSCR loans said I must use an LLC formed in Alabama as LLCs can only operate in the state they are formed. This doesn't seem right. Can somebody clarify if this is normal in real estate?
Also, I have been looking at creative ways to fund income properties with as little of my money as possible. I found a private lender to fund the 20% down payment, but the traditional lender said I am not allowed to use hard money lending. I was told to go to a private lender instead, and let the money season for 60 days. Can I get some clarification on this topic as well? I was getting ready to pull the trigger on some properties until this news from the traditional lender. Thank you everyone.
Most Popular Reply
"LLCs can only operate in the state they are formed" - Completely incorrect. In many states it is required (and probably just a good idea) to register an LLC from another state in the state in which you are doing business.
"Not allowed to use hard money lending"- That may be their rule but there is no law against using hard money lending, with or without an LLC. A hard money loan is, in effect, the same thing as a private money loan.