Buy a Rental Property Through an LLC using personal money?

Question

When we Buy a Rental Property Through an LLC, do we have to use our LLC business (money) checking account to transfer the fund to buy the property or we can use our personal checking to fund the property?

Megan Templeton · Answer

Hi @Tony Zhang

I would recommend using your LLC bank account to purchase the property to keep your records clean. If you need additional funds in your LLC bank account to purchase the property, you can do so by making an owner contribution to the LLC to add personal funds to your business account.

Thanks,

-Megan

Adrienne Bryson · Answer

You should read up on the "corporate veil". I suppose you could structure it as though you (your personal money) are funding the deal for your LLC like a lender would. But I don't know if that would still be considered commingling of funds.

It's so easy to move money into a business account, why don't you just pay as the LLC and not even risk it?

Peter Mckernan · Answer

@Tony Zhang Most banks qualify you and your partner(s) as the borrower on the loan not the LLC. There are few that do qualify the business/llc especially if there is not a big amount of money in the accounts/business or if the business has only been doing it for a short time. That being said you can find them you have to search a lot, and then they may have you be a co-signer on the loan as well. The hard money lenders will do this for you though if you are doing a BRRRR, just when you refi it will be then qualified through your name.

I would make it clean for your CPA/tax pro by having all the money from your personal account to the LLC account as an owner contribution (this means putting let's say $100K in there funding the deal) this would be an owner contribution to the LLC/business. Check with your CPA though since I am not one.

Buy a Rental Property Through an LLC using personal money?

Buy a Rental Property Through an LLC using personal money?

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