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Paola Prieto
  • Rental Property Investor
  • California
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LLC Loan on my first house

Paola Prieto
  • Rental Property Investor
  • California
Posted Feb 4 2023, 11:17

Dear group,
I am a newbie in this group but I have read some of your posts and I found them very helpful. 

I found a great family house and I would like to start my Investments in real state with it. I was wondering if I need to create an LLC before buying the house, or after it?… the question is basically because I talked to my bank and they told that since the LLC will be new and doesn't have any financial history they can't lend my any money on it. But if I get the loan under my name and then transfer it to an LLC, I'm afraid the bank can ask for the full amount of money on the loan. Does anyone have an advice on this? I really appreciate it.

Ps: if you have suggestions on what could be the best banks to work with or lawyers in this area I would appreciate it as well!!


thank you again :)

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Aleksandar Popivoda
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  • Investor
  • NW Indiana
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Aleksandar Popivoda
Pro Member
  • Investor
  • NW Indiana
Replied Feb 4 2023, 12:29

You don't need to create an LLC to buy your first investment house. Buy the house in your own name as you will get the best financing that way. Later on, if you really want to put the house under the LLC (but I wonder why? You never explained...) you can QuitClaim it to an LLC. Your bank won't care as long as you pay your mortgage.
I hope it helps. 

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Paola Prieto
  • Rental Property Investor
  • California
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Paola Prieto
  • Rental Property Investor
  • California
Replied Feb 4 2023, 12:41
Quote from @Aleksandar Popivoda:

You don't need to create an LLC to buy your first investment house. Buy the house in your own name as you will get the best financing that way. Later on, if you really want to put the house under the LLC (but I wonder why? You never explained...) you can QuitClaim it to an LLC. Your bank won't care as long as you pay your mortgage.
I hope it helps. 


Thank you for your reply @aleksandar! I would like to separate the business from my personal finances, as well as get some tax benefits since my plan is to invest with a partner. 

But based on your response, can I just transfer the property to the LLC later and get the mortgage under the LLC's name?

Thanks  

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Aleksandar Popivoda
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  • Investor
  • NW Indiana
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Aleksandar Popivoda
Pro Member
  • Investor
  • NW Indiana
Replied Feb 4 2023, 20:56
Quote from @Paola Prieto:

But based on your response, can I just transfer the property to the LLC later and get the mortgage under the LLC's name?

Thanks  

I am not following you... Why don't you just explain to us what is your plan and what are you trying to achieve? You never mention a partner in your original post. 

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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Investor
  • Austin, TX
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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Investor
  • Austin, TX
Replied Feb 4 2023, 22:07

If you're doing this on a small scale, you don't need to transfer the property into your LLC. Your other option is to use a commercial loan like DSCR.

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Paola Prieto
  • Rental Property Investor
  • California
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Paola Prieto
  • Rental Property Investor
  • California
Replied Feb 6 2023, 16:04

Thank you, @aleksandra and @eliott. My main purpose is to buy properties, save the cash flow, and re-invest that cash to buy more properties. I am planning on investing in this long-term project with a partner. We would like to start with a single-family house and keep expanding from it. Probably 2 houses per year (that's the plan, but It might change). I have read and heard that putting each property on a different LLC will protect you from any lawsuit (in case there is one) and also help you reduce taxes.

The house I mentioned could potentially be my first house. Any advice and help are welcomed! 

Thank you