Buying first Multi-Family - LLC Help (NJ )

[Amit Patel]

I want to buy a 3-family in an LLC but can only get mortgage on personal loan.
I am getting conflicting advice from RE Lawyer and accountants.
ANy advice would help, esp. if you did this in New Jersey

* Can i buy in my name and do a transfer to the LLC ( I was told Mortgage copnay doesn't like this but they can't do much about it if it is after the fact)

* Do I have to pay Title fees again ?
* Is this considered a true sale (ie. in NJ we have transfer taxes).
* Do you transfer over for full amount or nominal fee such as $1 If I transfer it over for a $1, when I goto sell, is my cost basis $1

Sorry for the many questions..Am new and feel comfortable with the property thanks to all the posts here but now having a hard time figuring how to structure this. I have a good networth and plan to buy a few more properties so want to do it right.

[Ankit Duggal]

Amit Patel I know you asked this questions a while ago but I thought I give you a response since I do real estate investments and consulting in the New Jersey market specifically. I am going to try to answer the question you laid out in your original post:

[b]* [b]Can i buy in my name and do a transfer to the LLC ->
Yes you can do it via a quit claim deed. Doing this does trigger the mortgage due on sale clause but typically if you make your payments on time the bank is less likely to care about it. The question I want to ask is why do you want to buy the asset in an LLC; is it for asset protection purposes or because you need to syndicate capital from other partners? If you are doing it solely for asset protection purposes then maybe a Revocable Trust would be a better method to make that happen as that is used typically for estate planning purposes anyway.

[/b]* Do I have to pay Title fees again ? ->
If you complete a quit claim deed transfer with a $100 consideration then you do not need to pay title or state transfer fees again.

[b]* Do you transfer over for full amount or nominal fee such as $1 If I transfer it over for a $1, when I goto sell, is my cost basis $1?->
This is great question. I would have to defer this question to a tax accountant as that is not my field of expertise. What i learned while i was getting my master's in real estate from NYU was that your basis would be atleast the debt amount as that will stay on the property and when you take the asset via a quit claim deed (this deed means that you are taking it subject to all outstanding liens). To secure your cost basis, you can make the exact dollar amount transfer for what you bought the asset to your LLC or SPV; however you will find up paying state transfer tax by doing that. Just keep that in mind

[/b]Banks for LLC loans? Go to a local community bank like Crown Bank or NorthEast Community Bank as they will be flexible when it comes to buying it under your LLC. You will have to provide a personal guarantee/recourse that I do not see a way around unless you are buying via a Self dIrected IRA.

Hope these answers help out.

Happy Investing

Ankit