Buying First Property as an LLC

[Whitney Saunders]

Question for the group: We just formed an LLC and are planning on buying a new property through a 1031 exchange. I left my job to oversee the transaction and manage the property we buy that will be a high volume rental. But the question is the financing piece - we will put 50% down on a $750,000 property but will rely on my wife's income for the lending, which is around $80,000. The property, once tenants are in place, will more than turn a profit, but the question is whether there are some creative lending practices my wife and I will need to explore, to ensure a ~$375,000 mortgage. Or based on these rough numbers we should just connect with lenders and let the process/numbers play out?

For context, we have over 800 credit scores & own two other properties since 2018, and have no housing costs currently where we live. Thanks for any and all input!

[Pierre Guirguis]

If the property is being purchased as an investment through the LLC, you may not need to rely on your wife's income at all depending on the loan type. A lot of investors in this situation use DSCR loans, where the lender qualifies the deal primarily based on the property's projected rental income vs. the mortgage payment, rather than personal income. With 50% down, strong credit, and prior ownership experience, that type of financing is usually very workable if the property cash flows. The main things lenders will look at are the rent projections, property type, and overall DSCR of the deal.

At this stage it’s definitely worth connecting with a few lenders to see how they would structure it. Based on the numbers you shared, the financing side shouldn’t be the limiting factor if the property supports the debt.