So before I purchase a multi family home I want to start an LLC for safety and tax purposes . I'm gonna be using my wife as a co-borrower when applying for my home loan so should I include her in the llc as well ?
If you're forming a LLC, then the LLC would purchase the properties and the lender might want the members of the LLC to personally guarantee the LLC's loan.
I'm not sure exactly what tax purposes you're looking for as many LLC's are a pass-through entity, which means the income the LLC makes is reflected on your individual taxes for the year.
For asset protection, if you choose not to do a LLC, you can just have an umbrella insurance policy. Plus, I'm guessing there won't be much equity in your property at least in the beginning, so there isn't exactly much actual asset to sue you for...unless you have other equity-rich assets.
Anyway, I doubt your wife could be a "co-borrower" to a loan that is to a LLC. If you form a LLC, have both of you be members of it. But you'll likely still have to personally guarantee your loans.
That's makes sense . I'm reading that's it's pretty difficult to get a loan to an llc . I guess it would make more sense to just get a loan in our name and protect it with an umbrella insurance policy ? Thanks for he help by the way .
Yeah, it definitely can be difficult to get a loan for a LLC, especially a new one with no track record. That is why if you do go the LLC route, your best bet would be to go talk with small banks in your area. You would talk to them before forming your LLC so that you haven't wasted your time/money/effort on forming an entity if even a small local bank won't loan to it.
But yes, your other option of owning in your name(s) and having umbrella insurance should be fine. I would just recommend that you get another mailing address that is not a PO Box format. You can either get a UPS box as your address or even some US Post Offices offer "Street Addressing", which is still just a physical box (like a PO Box), but the difference is the format of the address.
Then you can use this address as your official address that'll end up on public records like tax records for your rental properties, how future tenants, contractors, and the like will contact you, etc. Gives you a bit more privacy than giving our your actual home address. The key is just to not have an address that is formatted as PO Box 123. It needs to be formatted as the following:
123 Main St.
Palm Beach, FL
This way, you can use the address for official documents that don't allow the use of PO Boxes.
You will have to personally gurantee the loan, so really, it makes no difference. The banks that give you trouble with loaning to an LLC, usually plan to sell the note. I've had no trouble getting my loans in my LLC name. I only use small banks for what it's worth.
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