Buying 8 unit apartment. Is an LLC the best way?

Buying 8 unit apartment. Is an LLC the best way?

Rental Property Investor · Appleton, WI · Member since 2019 · 36 posts · 11 votes

I have been researching this apartment bldg the last couple of months and I am looking for some incite from other 5+ unit investors. I went heavy on expenses and light on revenue and the COC return is 23%, so I want to chase this but I have a few dilemmas. The biggest dilemma is that my capital is around $15k, I just purchased a single family home about 2 months ago to BRRRR and that is all i will really have left to go re-invest into another asset. So here are a few questions I have for my fellow investors.

1. How much do I need down if I start an LLC for the property?

2. What are some options that I have where I can delay or minimize/defer payment for a few months but still own the property if I put it under an LLC?

3. Is getting an LLC the best option here? If not, what may be some other ones?

4. I know I can find investors and I am not sure if this is the wrong mentality to have, but I selfishly want this property solely in my name. Is there other options other then looking for investors? 

5. What are some things that you guys have ran into that you would of done differently when starting an LLC and going into apartment bldgs?

Thanks to everyone in advance.

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    6y

    Kyle:

    You are applying single family thinking to multi family investing.  Let me try to provide some clarity.

    Usually apartments are purchased in an LLC. People think you do that to protect yourself from a lawsuit on the property. Really is more the reverse. The bank wants the property in the LLC to protect the property against something you might do.  Remember, the bank is your partner on this and often putting in more money than you are!

    Financing in apartments is more dependent on the property performance than the owner's finances.  How much you have to put down will depend more on the strength of the deal than your FICO.  That said, you are going to need some cash, even if just for working capital.  It is probably going to be really hard to buy something like this with just $15K.  The only way I could see you owning all of it is if someone gives you a personal loan for the rest.

    Good luck.

  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    6y

    Minimum 20% down. It if smaller amount or limited track record 25-30% down.

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