Flipper/Rehabber · Norton, MA · Member since 2019 · 31 posts · 15 votes
I'm going to start a LLC. I've yet to get my first deal. But I need the Corp to get a loan. Should I get a s or c Corp. I plan on flipping houses and using hard money loans. I was going to wait for my first deal but I don’t want to lose it while waiting for my Corp to start up.
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
6y
I agree with @Cameron Tope. Too many new investors waste time, energy, and money worrying about legal entities, website, logos, company names, a mascot, a YouTube channel, social media pages, and anything else they can do to avoid worrying about the meat and potatoes of the business--finding and executing deals.
Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
6y
@Charles Graham I'm not an attorney but I wouldn't worry too much about having the right liability structure when you don't even have a deal. Truth is even if you have the right structure you're probably not using it correctly which "pierces the corporate veil" and eliminates the protection.
Get a couple deals under your belt then you can use those proceeds to setup a structure. I see too many investors with the greatest series LLC structure that an attorney setup for 20k or 30k and they haven't even done a deal...
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Charles Graham - The "advised" method would be to start a new LLC for every flip and close the LLC down after each sale. You could have a separate C-corp LLC own these LLC's, which pays you a W2 for managing the flip.
This is pretty in the weeds stuff though. A single member or S-corp LLC would be fine for your purposes I'm sure
Real Estate Agent · New York, NY · Member since 2019 · 55 posts · 28 votes
6y
@Charles Graham Find out w/your CPA in the state you are going to invest what are the rules operating as an LLC vs. Corp. In some states you will need to advertise your business (if under Corp) before you can actually use it which would take another few weeks. Prepare a few options for LLC names, Members Info, Address etc.
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
6y
I agree with @Cameron Tope. Too many new investors waste time, energy, and money worrying about legal entities, website, logos, company names, a mascot, a YouTube channel, social media pages, and anything else they can do to avoid worrying about the meat and potatoes of the business--finding and executing deals.
Flipper/Rehabber · Norton, MA · Member since 2019 · 31 posts · 15 votes
6y
but what if I find a deal and the hard money lender won't give me loan until I start a LLC ? Honestly I'm not really concerned with the LLC as much as I am about funding the deal.
no, hard to refinance. if you want to flip it matters less, if you couldn't sell and want to turn it into a rental you can't refinance until it is seasoned for 2 years. You may be able to find other means to finance but all costs unnecessary amount of money.
Accountant · Los Angeles · Member since 2019 · 58 posts · 25 votes
6y
If your Business (LLC or Corp) is not in the business for at least two years, conventionally nobody would lend on the Corp status alone. They probably will ask you to get a personal guarantee. With hard money lending, certainly, they are more prudent and would prefer to lend on your personal guarantee.
In essence, I would recommend considering Nicole's comments, get it done at the lowest cost and with the lowest complexity.
Investor · Johns Creek, GA · Member since 2017 · 463 posts · 488 votes
6y
@Charles Graham don't worry about the LLC. Read the book "Lean Startup". I am a big fan of their model. Cut the extra costs that are not revenue generating and focus on what makes you money first which is deals and funding. The structure will follow once you've got a business going. Without a paying customer, you don't have a business . And without a business, the structure is nothing. Hope this helped.
Flipper/Rehabber · Norton, MA · Member since 2019 · 31 posts · 15 votes
6y
all I'm saying is the hard money lender will not lend unless it is to a LLC. My question is if I should start my LLC before I get my first deal or not.
Berlin, Berlin · Member since 2017 · 13 posts · 3 votes
6y
@Charles Graham Have you been offered any rates and terms yet. I am searching for lending for my Limited Partnership. I am having trouble finding lending. I’ve heard it may be possible to get lending at smaller banks for an entity. I am curious which rates would be better?? Hard Money lender or small bank. Any help In the right direction is appreciated.
Berlin, Berlin · Member since 2017 · 13 posts · 3 votes
6y
If anyone else has any leads on small banks in the Midsouth or Midwest or any hard money lenders that lend to Limited Partnerships???!!!!!! Would be a great help to get pointed in the right direction. Thanks.
Lender · Paramus, NJ · Member since 2016 · 118 posts · 33 votes
6y
@Charles Graham - how long does it take to set up LLC in MA. I know that in NJ it takes 10 min so no reason to rush. In some states like NY it can take longer - probably makes sense to get it out of the way.
Lender · Paramus, NJ · Member since 2016 · 118 posts · 33 votes
6y
@Charles Graham - reading some comments about LLC on this chat and reckon that it may be worth while consulting a good RE lawyer. Setting up LLC costs a bit of money, creates paperwork and potential tax work. But nobody talks here about downside scenario - something happens on premises, someone got injured or worse. LLC, if property structured, may protect you/your other assets.
Not suggesting that your energy should not be spend on core business of searching for deals. Just saying that setting up LLC, in my humble opinion, is worth considering.
Rental Property Investor · Phoenix, AZ · Member since 2019 · 60 posts · 45 votes
6y
@Charles Graham
The reason the hard money lender is requiring you to get an LLC is because the loan you are looking at is a commercial loan. Meaning you have to be a "entity" to obtain said loan.
Entity meaning LLC, S Corp... structure. There are ways to use a commercial loan under an LLC then refinance out into a conventional...like a BRRRR.
Flipper/Rehabber · Washington state · Member since 2019 · 16 posts · 10 votes
6y
@Charles Graham have you considered an fha 203k loan it only requires 3.5% down and they will included the rehab budget. I live in the west coast but the hard money lenders out here will lend without an LLC.