First time purchase

4 Replies

Hello everyone. I had a question regarding my first purchase. When applying for the loan, should I do it in my own name, or create an LLC and apply in a business name. Eventually I want to put all properties in a business name but I'm worried going to get a loan, whether or not hard money or conventional, that my first attempt will be more difficult if it's my business's first attempt at getting a loan. Any suggestions?

It depends on what you are trying to do.
Are you looking to flip? Would you be seeking a loan from a HML on conventional lender?
Will you be living in the property or renting out? How much down payment have you got?

Generally speaking, if you are looking to live in the property or rent it out and be getting a loan from a conventional lender, you are better off putting under your name, simply because you'll have a hard time getting a loan otherwise.
If you'll be flipping, an LLC is better but the capital you need upfront is usually larger.
It all depends.

Hope it helps.

Thank you Patrice. I wouldn’t be living in it, just a flip. Although I’ve thought about getting a conventional loan on a fixer upper then paying out of pocket for the remodel and renting it out. Just seems like that option for my first property wouldn’t give me the returns needed fast enough to move on to my next property

If you're looking to flip and using hard money, most hard money lenders prefer you to take title in the name of an entity; you'll have more loan options that way.  Hard money lenders don't care too much about your business financials or personal financials.  They care about the deal more because they are asset-based lenders.

I can only speak to what my company does specifically but if the state does not require you close in an entity you have the ability to close that way or as an individual. Trusts (as long as they are revocable) are also allowed as well. We do not have a difference in program based on the way you are taking title but as mentioned previously some lender just might. I have done deals as individuals, INC's, LLC's, and Trusts. There are other reasons to consider taking title in an entity and those you will have to discuss with your accountant and attorney.

Hope that helps and doesn't add to the confusion!

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