Hi Bigger Pockets Experts...
1. Is it a good idea to buy a Co-op through my LLC. It appears easier to buy it as an individual because I may get push back from a Co-Op board who dislike LLCs because they categorize them as investors.
2. I can't afford big ticket real estate purchases right now so my goal is to use an LLC to buy undervalued 1 or 2 bedroom Co-op apartments and rent them out. Does anyone one know if that's a good strategy? I'm in Yonkers, NY.
Have you already set up the LLC @Susanne Walker ? Why not just buy as a SP? Easier to get financing, less scrutiny from the Board. Once you make your first purchase add a $1M liability policy. At this stage of investing you really won't get any additional liability protection from the LLC. You will however spend more money and time setting it up and maintaining it annually.
Thanks @Rob Beland. Does SP refer to an individual buyer? 2. On the $1 million liability policy...what's the term used for that type of insurance? 3. Do u think the strategy of buying undervalued Co-ops make sense...is it widely done?
You may be in for some roadblocks using that strategy. As you mentioned the Co-op Boards can and do make things difficult to work a rental business in their complexes.
Many (but not all) specifically prohibit renting out the units. Some of those that do allow it limits the amount of time the unit can be rented out and charge an addition fee as part of the maintenance fees to have the unit run as a rental.
On the tenant screening side of things the Co-op board and /or management company many want to do their own tenant screening (possibly helpful, definitely slows things down) but they can charge a relatively hefty fee for processing.
Long and short of it is, your strategy CAN WORK, but their are some additional hurdles to clear. Check the Co-Op Bylaws carefully and talk to the Co-Op board.
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