I am going to buy a property that is being foreclosed next week. One of the things I had to do was get another family member to go in with me on the deal, so that we had sufficient cash to close at the live foreclosure auction.
I wanted to understand how to structure the deal. I currently have a single member LLC that I setup to hold future investment properties. Need to understand the benefits of having the LLC buy this investment property. However, how do I then account for the profit or loss that I have to split with my family member?
Also, would I have trouble refinancing the home because its owned by an LLC. One of the benefits that my family brings is that he has excellent credit which I dont have. So ideally, I would like to utilize his credit when we refinance.
Given all of the above, how would you suggest I structure this first transaction.
Setting up a land trust for the property is the best way to go especially if you plan on buying several. I am not sure of the benefits on refinancing down the road unless you have a high interest rate going into the purchase in the being.
I would seek legal before moving forward there are more things you must have in place.
Yes, the LLC will limit your financing choices, essentially eliminating any 20-30 year fixed mtg.s. Don't get too carried away, most people don't realize how high the prices get at auction.
thanks for your inputs.
@Aditya Mehta - with an LLC you will need to use commercial financing. Which can be great if you are buying low and cashing out equity as there are no seasoning requirements to worry about. LLC's do NOT limit your financing it just moves you into a different type of lending world. Once you understand the norms in commercial financing you will find there is a lot that can be done. Feel free to contact me if you would like more info.
I will contact you tomorrow.
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