When should I start buying under an LLC?

[Devin Lembcke]

I currently have 2 single family homes under my own name and am looking to buy a 4 plex and am wondering if I should keep buying under my name or buy under an LLC for tax purposes?

[Kevin Romines]

If it were me, I would buy up to 10 properties in your personal name, then switch to buying using a Non-QM loan which will allow you to buy in your personal name or an entity and will not have any restrictions on the number of financed properties you can have. Fannie Mae and Freddie Mac have the 10 finance property rule, Non-QM doesn't have a rule. 

You want the advantage of the lower rates that you can get with Fannie and Freddie. Fannie also allows you to transfer the title to an LLC after closing without it violating the Due on Sale clause of the contract.

Regarding tax advantages, I would recommend you talk with your CPA. Most rental properties will show up on a person's schedule E and all revenue minus all expenses will result in either a profit or a loss which will then translate to your personal income. Commercial loans on properties where there isn't a personal guarantee will not count in the 10 financed properties rules and will be somewhat easier for a loan officer and underwriter to deal with, but in the end, from a lending standpoint it really doesn't matter, it's all workable for the loan officer and underwriter that has the proper experience working with borrowers that have multiple rentals. 

I hope this helps?