I've found a deal I like. FSBO property for 49k. 10k down gets me keys. 15k reno. 110k arv. I love the cash on cash return on this deal. The only problem I have is that the owner wants to sell on contract for deed through proper escrow and does not want me to sign through my llc, which is set up for s-corp taxes. I understand his need for protection, which is why he is doing contract for deed. I just want all the write-offs and the growth and protection of my llc. Is there a way to appease both parties while maintaining the seller financing terms? I have offered to put a personal guarantee on the contract. Thanks
I don't think putting the note in your name and the property in your LLC's name is a good idea. You need to keep corporate formalities. Technically the way you are doing it and the way he wants it done has no real effect on him. There is no guarantee of payment under a Contract For Deed.. You miss payments you walk away with nothing. The only remedy usually in a CFD is getting the property back. Some folks have put penalty clauses in CFD's but often when you do that then courts start treating the CFD as a mortgage and make you do a foreclosure.
You might try explaining how the CFD will work. Otherwise your sole remedy is do it like Seller wants. Good Luck
@ Devin Mcclish The seller is not wanting to do a deed of trust with owner financed note. He is wanting to do contract for deed. This would not transfer title until the contract is paid. Seller maintains title keeping him more secure that the financing is actually paid. Also keeps both of us from incurring title fees until I sell, doing double closing. I am not sure that if I can use "and/or assigns" on contract and transfer when I go to sell. Seller seems to be worried that if I decide to keep as rental that he would have a hard time evicting a corporation. I am worried about my tax implications.
From what I have read you will not be allowed to set up a contract for deed in your LLC unless you have the contract underwritten by a licensed mortgage broker. You may already be figuring on doing that but if not that is going to run you afoul of the new federal laws. You are allowed in most states to do a few of these land contracts in your own name per year so that might be a possibility. I have a few paid for rentals that i am currently studying on selling on contract for deed to establish a solid retirement income minus the rental hassle. Looks pretty promising so far but need info if anyone has some.
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