Buying Income Property with a friend / partner in an LLC

2 Replies

Bigger Pockets World,

I am interested in buying my first rental property and have read a great deal on whether to put this in an LLC by creating a general warranty deed and deeding the property over to our LLC. I think this is what makes most sense, but this is done after buying the property. It is my understanding the bank is not "technically" okay with this, but they won't due anything as long as they are getting paid.My question is: What is the best way to physically pay for the home prior to putting it in your LLC? I am assuming the check for the down payment and closing costs can't come from the LLC?  Are there other options for splitting these costs among individuals within the LLC or would this money just come from a personal account and once you physically own the house you would deed it over to your LLC?

Best,

Kyle

Kyle,

We typically do business with single purpose entity LLCs. Every thing is run thru the LLC to maintain the LLCs asset protections. We typically work on 2 million dollar deals and up, but I would think asset protection is one of your reasons for putting the asset in an LLC.

Mark

Thanks Mark,

Everything you said makes sense and I appreciate the quick reply. How do you typically buy the property? I am assuming the check for the down payment and closing costs can't come from the LLC? The bank wants someone to be liable and make sure the loan is "substantially" backed so they will not allow the sale to go directly into the LLC. Are there other options for splitting these costs among individuals within the LLC or would this money just come from a personal account and once you physically own the house you would deed it over to your LLC?