Purchasing homes w/ LLC

4 Replies

Hi Everyone, 

Sorry ahead of time if this question has been answered already, I looked and didn't quite get the answer I am looking for.

If I am purchasing MFR using a LLC, how would that work ? It would be a new LLC with no established credit or income, so how would a bank be willing to finance that ?

Thanks, 

Isiah:

This is a pet peeve of mine but BP calls anything more than 1 family a "multi-family".  That is a very poor way to divide the market.   

Is this 2-4 units or 5+ units?  It makes a big difference.  Anything 2-4 units, from a financing perspective is considered single family and comps are used to assess value.   

If 2-4 units, and you are using Fannie Mae, you cannot purchase it in an LLC. If you are using a bank and willing to accept higher interest rates and a short-term balloon, you can buy it in the name of your LLC but you personally will be on the hook.

If this is a true apartment, which is 5+ units, you can buy it through your LLC. Whether or not that has personal recourse is complicated so talk to your financing company.

Sorry I was not aware of this but I was referring to 2-4 units mostly. 

Correct me if I'm wrong but if I go to finance as an LLC I'm assuming they will use my personal credit score & income due to being a brand new LLC ?

Try a smaller bank that has a commercial lending unit. When I last did this they looked at the personal finances and tax returns for LLC members owning more than 20%. They required a personal guarantee also because the LLC was less than 2 years old and didn't have sufficient income yet.

Since you're nearby, contact me if you'd like specifics.

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