First Timer - Will flipping hurt me later?

Question

Hi All!

I am interested in getting into REI by flipping properties using hard money through an LLC. I have all of the things needed to qualify for hard money but I haven’t purchased a primary residence because I’m in grad school & don’t meet the DTI requirements yet (like most millennials 🤷🏾‍♀️).

Will flipping through an LLC prevent me from being a first time home buyer when I’m ready to purchase a primary residence?? I have no clear idea of what state I will end up in at this time or if that will impact the answer.

Account Closed · Answer

@Amber McGill if you're carrying active debt from a hard money loan at the time in which you are purchasing a primary residence, then it will definitely be considered in your qualification for financing in a primary residence.

I don't think it matters if you do it in an LLC or not, you'll be a member of that LLC so your assets/liabilities/income/debt service will pass through and be considered as yours. The hard money loan to the LLC will likely require "recourse" in it's terms as well, meaning the debtor will have access to your personal assets to remedy the default amount owed in the event of default, should the property value not be enough to remedy the default.

All the best! Successful flips are a great money maker!