banks are closed today (presidents day) but I found two properties that are exactly what I am looking for. My question as a first time buyer how do we buy these homes through an llc. I'm guessing the banks are going to look at our personal financials. Also our llc hasn't even been set up yet. This is happining a little sooner than planned but the numbers work and its a great deal. Just trying to understand how the llc home buying process works. If possible (to speed up the process) can we buy them personally and sell it to the llc once it gets filed? Am I going to run into troubles doing this? Thanks!
conventional financing requires that you purchase in your individual name. You may be able to transfer to LLC after you obtain financing.
Thanks for the quick response! Is it unheard of to buy two properties at once?
My father and I are in this together, His AGI is over 150k and both of our credit scores are above 760, mine is closer to 800.
If this is not likely what are other avenues as far as private lenders and hard money? Any experience or tips dealing with alternative financing?
@Daniel Dexter Conventional loans will not allow you to buy in an LLC. However, if you're buying cash, just have the contract put in your LLCs name. Most people want to utilize leverage therefore making that impossible.
It isn't unheard of to buy two properties at once. My brother and I co-own all of our properties. We have personal mortgages on them, but every rent check is paid to our LLC and every expense comes out of our LLC. The only danger lies in the personal liability with the mortgage in your name.
We also like to use land trusts on our deals, each one is set up on a separate trust. Provides a great deal of privacy.
I apologize for my ignorance but how does a land trust work?
@Daniel Dexter as long as you qualify you can get two mortgages in your name at the same time.
Jerry is correct, also I think lenders ask that you disclose that you have another property on contract during an loan application. Check with your lender if you are financing, he will know.
I once set up one llc for each property I owned and it caused a lot of headache with no real return on investment.
When I sold one of the properties the title company would make a check out to the owning entity name not to me directly so I would go to the bank and find out they would not cash the check because while I was the sole member the name would not match what was on my personal bank account so I would need to open an account in the name of the llc just to cash the check.
I had failed to pay a filing fee and so the state had dissolved the llc as an entity so I had to pay a few hundred to reinstate the llc and then I had to take that documentation to the bank and pay a fee to open an account for the LLC because it was a business account and not a personal account.
@Daniel Dexter I preface this with I am no attorney and would highly suggest you contact one. With that being said...I woul look at an umbrella policy that gives you greater asset protection. You can get a $1 million policy for less than $30 a month and you can place both homes under the policy. You won't get any protection from banks coming after you if you default but you won't get that from an llc either if you finance the home since you will have to personally guarantee it. The umbrella will give additional coverage to help you whether a lawsuit if someone is hurt at one of the properties. There are a lot of post on BP about umbrella policies so take a few minutes to dig a little deeper. Best of Luck