Purchasing Condo with LLC

1 Reply

Good day everyone,

I purchased a condo upon my graduation from college. I currently am the owner of the property and purchased it 3 years ago with the intent of it being a rental property one day. I have been paying upwards of $100 extra on my mortgage to help build equity fast. In 5 years I would like to purchase a house with my equity but also retain the property as a rental. 

My proposal is this:

I would like to establish an LLC. I want the LLC to purchase my condo, that way I can get the equity I've put into it to make a nice down payment on a new house for my family. At the same time I would be retaining the ownership of the condo which I can then rent through the LLC. 

Can anyone give me some background as to whether or not this is at all possible. What does the LLC need as a down payment on the condo (I assume 20%). Is it hard to get a loan this way? has anyone done this? 


Thank you for any replies that may come. 

Hi @Will Brown

You do not need the LLC to pull your equity out of your condo. You just have to cash-out refinance. You would still leave 20% equity in the condo because the banks want 80% LTV.

Example

Condo Market Price = $100,000
LTV of 80% = $80,000 (Market Price * 80%)

You can take out $80,000 minus what you still owe.  So if your mortgage is at $30,000 then you can take $50,000 cash.

LTV: $80,000
Debt: $30,000

LTV - Debt = $50,000.

Hope this gives you the idea. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here