BP network what type of real estate property would benefit from being in an LLC? the reason I'm asking is I hear some people say they purchased a property and put it in an LLC, I hear some people say do not put a property in an LLC if trying to refinance. When is it most appropriate to put a property in an LLC? and when isn't it?
The LLC has liability benefits. I'm not a lawyer but the LLC protects your personal finances and your other LLCs from that of the company. Should the company not be able to meet its financial obligations, you won't be personally liable. This would not apply if you get a loan with a personal guarantee. This also won't apply if you are grossly negligent in how you manage the property.
The downsides of LLC also turn off some people. There is a cost to start up an LLC and it is recommended you have a lawyer help form the company. There is a cost to maintain the LLC as well. The biggest drawback for starting investors is that you can't get FHA loans for an LLC, which means that your lowest down payment for an LLC will probably by 20% vs 3% with FHA.
That being said, I have all my properties in various LLCs and I recommend it for everyone except first time investors. Happy investing!
My thoughts are to get my first property traditional, conventional or FHA any afterwards I was thinking in my LLC.
The only other thing to note from what Benjamin said above is you will need to check with your lender to make sure they are okay with you getting a loan through an LLC for a residential property. There are a few ways to get around it, but you will want to make sure that they will still give you a personal, residential loan to an LLC. Sometimes if you are to borrow under an LLC they will make you get a commercial loan which will be a higher rate and typically not 30 years in term length.
Consult your lender to learn more from their end.
Thanks again guys.