BRRRR out of state and refinancing in an LLC

4 Replies

Hey BPers!

I'm thinking of investing out of state, specifically in value add/fixer uppers. I'm planning on using a HML and from the ones I've talked to so far, they require that I borrow within an LLC.

I've got two questions:

1. When setting up the LLC does it matter what state I set it up in? Do I need one for every state that I'm going to invest in? Or even so far as an LLC for every property I acquire?

2. How would I go about refinancing a property I have under my LLC? Would love to connect with any investor friendly lenders on here.

Thanks!

@Angus Yang here in Pittsburgh I work with hundreds of out of state investors and they all have different opinions on how to set up this and how to set up that. I have a great attorney here so if you plan to do something in this area give me a shout. I would talk with three very good RE attorneys and get their opinions. Also dont forget to talk to and interview three good CPAs because what you do and how you do it can have an affect on the IRS tax returns. To get an opinion online is ok but this is the foundation of your business and it should be thought out and set up properly. 

Alex Deacon, Real Estate Agent
412-613-4435

Hi Alex, I’m looking to form an LLC in PA. Can you message me your RE attorney you recommend there. Thanks a lot!

@Angus Yang

If investing without an LLC is something you want to you - I am sure some hard money lenders will do so. You likely have to call up some more people.

You normally want to create the LLC in the state that the property is located in. 

1. When setting up the LLC does it matter what state I set it up in? Do I need one for every state that I'm going to invest in? Or even so far as an LLC for every property I acquire?

You do not need to create a new LLC for every state that you plan to invest in. You have the option of registering the LLC as a "foreign LLC" in the states that you plan to invest in the future.
However, you should reach out to an attorney to see what is the best way to do this. You may want to create one or multiple LLC's based on risk factors and risk tolerance.

2. How would I go about refinancing a property I have under my LLC? Would love to connect with any investor friendly lenders on here.

Banks under Fannie Mae/Freddie Mac guidelines do not issue loans to LLC's.
Therefore - you may need to reach out to a portfolio lender for the refinance.

Basit Siddiqi, CPA
917-280-8544

Also keep in mind that if you already own the property and want to create an LLC to move it into; depending where you are you will probably have to pay transfer tax which could a substantial chunk of change. I learned that one the hard way!

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