Should I start a LLC to buy my 2nd property

Question

Hey I am currently house hacking a home I own with my brother. I have about 50k aside and a 800 credit score but only made 30k on paper for the year. I’m worried I won’t qualify for a mortgage because of my income. Should i look to start a LLC to buy my 2nd property ? Looking for some advice. Thank you!

Jordan Alexander · Answer

If you go to a bank and tell them you plan to purchase a property with an LLC, then they will require a bigger down payment (typically 25-35%). Look into creative finance options or DSCR loans. You could also keep house hacking year after year.

Benjamin Aaker · Answer

Your issue with the bank will be your income. If you have a lot of experience in rentals, you might be able to find a DSCR loan. There usually needs to be some guarantee involved in this type of loan anyway.

You probably will need to continue partnering with your brother or find another partner to guarantee a conventional loan. If you do that, you should get an LLC simply because of the multiple partners.

As @Allan Smith states, the LLC alone won't help you get a loan. It's set up to give you some liability protections when owning the property.

Peter Mckernan · Answer

House hacking and getting an LLC, which that property is still technically going to be your primary which is not advised to put in an LLC. If it was a pure rental property, then I would said put it into an LLC (this will not increase your chances of a mortgage by the way). There are bigger tax implications as you put a "primary" into an LLC, which is something you should talk with a CPA about as well to get clarity on your financial position.

Alecia Loveless · Answer

@Michael Chwalek You will get better interest rates in your own name. Until you have lots of assets or a bunch of equity built up insurance and an umbrella policy should suffice. This is not legal advice.

Allan Smith · Answer

An llc won't help you get a mortgage. At all.

Should I start a LLC to buy my 2nd property

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