Form an LLC for your first BRRRR property?

Question

Currently, under the process of a quiet title of a SFH here in the state of South Carolina. I know it will need a lot of work to get it rent-ready and later cash-out refinance it. My concern is, whether or not to form an LLC for the tax write-offs since the cost of rehab will be significant. Or, on the other hand, should rehab be paid cash only on the first investment property?

Note: Plan to hire contractors that can provide proof of insurance, W9, and business license to properly file those expenses. The quiet title action would possibly take a month 1/2 to get completed.

Thanks in advance!

Note: Plan to hire contractors that can provide proof of insurance, W9, and business license to properly file those expenses. The quiet title action would possibly take a month 1/2 to get completed.

Thanks in advance!

Jon Reed · Answer

I would always say do it all through an LLC for the protection it provides, separation between your business and personal credit, and tax advantages.

Yianni O'Hara · Answer

Hi guys- newbie here, so have pity please. I figured I'd jump in as this is also concept I've been thinking about- to LLC or not. Excluding options like hard money or private lenders, are there certain types of banks or category of lenders that are not averse to lending to an LLC, or perhaps even focus in that area? If folks have experience or insight to share that would be helpful.

Jesus- thanks for getting this discussion going! Have you been in talks with banks/lenders and this is what you're hearing?

Happy Thanksgiving as well!

Jesus Sosa · Answer

Yeah, I am leaning more toward the formation of an LLC. For protection purposes, especially since this property has been purchased cash no leverage at all - yet. After seasoning, I am planning to cash-out refinance; however, the con of this is that most banks don't necessarily like lending to LLC's/Corps. They mostly lend only to properties in your personal name.