Rental Property Investor · AZ · Member since 2017 · 6 posts · 0 votes
Hello my fellow investors,
Let me tell you a little about myself before I ask my question. I live in the Phoenix area and I am 35 years old and I just starting looking into real estate investing. I am a complete newbie and eager to make it. I already have a home that is estimated at around $550k. I still have a balance of $360k. I already applied for 2 LLCs (Arizona and Florida) so I can put my rentals under the LLC in order to protect my personal belongings. My question is, If I were to buy property using HELOC, Would that tie my personal house to my LLC. Meaning: If I were to get sued, since I used my personal house to get credit, would my house be up for grabs.
That was my whole reason for creating the LLC. So if it is up for grabs, I guess I will have to get financed another way.
Any advice will be greatly appreciated. Thank you.
Your personal residence would be protected by the LLC. If you were sued, ONLY the LLC assets would be "up for grabs". So as long as your personal residence stays in your personal name, it doesn't matter if there is a HELOC on it, or if that was the source of funds for the LLC.
Happy to answer any other questions about this or the Phoenix market!
Your personal residence would be protected by the LLC. If you were sued, ONLY the LLC assets would be "up for grabs". So as long as your personal residence stays in your personal name, it doesn't matter if there is a HELOC on it, or if that was the source of funds for the LLC.
Happy to answer any other questions about this or the Phoenix market!
I agree (from what I have researched) that Pam is correct. I also bought my first rental using a HELOC (this year) and under an LLC. I pay the HELOC will all funds available to bring down the interest, then pull out what I need for bills....then repeat. The HELOC (while I haven't found my next property yet) allows me to immediately have the cash for down payments. Good luck to you! Lisa
Thank you Pamela for taking the time out to help answer my question. I am just waiting for my LLCs to get approved from the state before moving forward and contacting realtors, but when I receive it I will be sure to contact you again since I am looking in the Phoenix area.
Lisa, thank you for replying. That sounds like a interesting strategy you have there. Thank you for the insight. I appreciate it.
I agree (from what I have researched) that Pam is correct. I also bought my first rental using a HELOC (this year) and under an LLC. I pay the HELOC will all funds available to bring down the interest, then pull out what I need for bills....then repeat. The HELOC (while I haven't found my next property yet) allows me to immediately have the cash for down payments. Good luck to you! Lisa
Hi Lisa, did you buy the property outright or did you just use the HELOC funds as a down payment? What about repairs? Are you just using the cash flow to pay back the HELOC or did you re-fi the property and pay off the HELOC with lump sum?
Thank you Pamela for taking the time out to help answer my question. I am just waiting for my LLCs to get approved from the state before moving forward and contacting realtors, but when I receive it I will be sure to contact you again since I am looking in the Phoenix area.
Lisa, thank you for replying. That sounds like a interesting strategy you have there. Thank you for the insight. I appreciate it.
Hi Angel, what application or forms are required to create an LLC? Is the process difficult? How much does it cost?
Hi @David Kuhlke, Since I am a complete newbie, I decided to use Legal zoom. The process was super easy. It took about 15 mins to fill out online. Then they will send you an email so you can call and go a little more into detail and confirm what you are trying to do (took about 20 mins). It was the really easy to set up, but it does take some money to set up. It was about $159 for them to do all the paperwork and submit it to your state. Once they get it back they will inform you, or you can keep track of it on their app.