Purchase a home out of our LLC with VA loan for primary residence

7 Replies

Hello BP. I have a question for all the lender's and investors who have had experience with this situation. Our LLC has purchased a property with the intent to fix and flip. I am currently renting and am considering purchasing the home from our LLC. Can I use my VA loan benefit to purchase the property from my LLC since it will be a primary residence, and pay off he hard money loan used to purchase the property. Can this even be one since I am a managing member of the LLC, & is there any conflict of interest issues to deal with. Thanks.

Angel Rivera

good question. . I really want to know the answer to that question? 

That is a very specific question but there are probably a few people here that can answer that. I would suggest you visit the va website to get some clairification but I think you will have to call.

Before you do that I would ask a good mortgage broker, your accountant and lawyer. I would be leaning towards it being ok but I don't like messing with the government sponsored programs.

Bummer to be doing fix and flip business inside an entity that best caters to buy and hold / passive income and asset protection.  

My guess is it has to be an arm's-length transaction but I am no VA loan expert. The VA loan is just an expensive low DP loan disguised as a 'thank you' to vets, IMO. I would save up some more money, wait for price seasoning and go conventional. Thank you for your service from a fellow vet @Angel Rivera !

@Angel Rivera  What you are suggesting is a non-arm's length transaction. These are tricky and heavily scrutinized for fraud/conflict-of-interest.

If you intention is to truly occupy the property as your primary residence, and can provide a satisfactory evidence/story to convince the underwriter then most likely you should be OK. I say most likely because in these type of transactions even the smallest thing can result in the loan being declined (e.g. DTI of 45.2% when max is 45%).

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Upen Patel, Lender in (#National Lender NMLS 1374243)
(571) 331-5161
Originally posted by @Steve Vaughan :

Bummer to be doing fix and flip business inside an entity that best caters to buy and hold / passive income and asset protection.  

...

@Angel Rivera !

How do you know that Angel has not elected taxation treatment of a corporation for the LLC?

@Steve Babiak you're right and I don't know if he's elected corporate tax treatment.  So many 'sophisticated' methods of investing get folks' rears in cracks I probably got carried away.  

@Angel Rivera - I am not a tax adviser or attorney.  My statement about LLCs should have ended with ...in general.   Cheers!

Thank you all for your advice and comments. Oh and yes, our LLC is S Corp tax classified.

Angel Rivera

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