Updated over 6 years ago on . Most recent reply
LLC start up questions
Hello everyone!
I am a new member of BP, and a beginner entrepreneur. I am planning to start my own rental property LLC in North Carolina. I've read a few books and scoured the internet on how to do it. After doing that, I wish I could say I had a clear-cut action plan. I was happy to find this BP site and hope I can get some answers from those pros out there. Here are my first 2 questions:
1. Should I go ahead and spend money on having an attorney helping me with my LLC start up, or could I just sufficiently use some internet resources like legalzoom.
2. Is it more beneficial to buy my first property outside of LLC? I hear the banks don't like giving loans to LLC, and if you are lucky to find one, the interest rate in comparison to a conventional loan will be outrageous.
Thank you in advance!
Most Popular Reply
I agree with @Kenneth Garrett that you can use an online source, but they are not perfect and some people who set up those LLCs aren't actually protected due to other circumstances - Check out this article for some examples. I would recommend getting an attorney to help you set up the LLC so that it is set up right the first time.
In regards to the issues with financing an LLC, you could go the route of the commercial loan. Another strategy is to purchase the property in your own name then transfer it into a land trust that will assign the LLC as a beneficiary - as explained by this article. This means you can have access to the loans that would available to you in your personal name, and the lender cannot use the Due on Sale Clause to call the loan because the St Germain Act protects the Land Trust, as it is considered an estate planning tool.
An experienced attorney should be able to help you identify strategies like the one above to help protect you, and ultimately save you time and money in the process. I work with these structures often and they are not as complicated as many will try make them sound.
This is not legal advice, just my opinion as a real estate investor.