Financing Real Estate in Business name

4 Replies

Anyone want to share there experience and advice on putting properties in a LLC instead of personal name?

Hey Marquise,

There are many many effective ways to hold your real estate. Each way seems to have its pros and cons. LLCs do provide asset protection in the sense of separating your personal assets from the business. I have 2 PA LLCs which each hold about 8 units a piece. I then use another LLC to hold the rent collections for the entire portfolio. Once again, this just removes my personal name as far as possible to separate my personal assets.

Do you have an accountant? I'd suggest syncing up with them and their real estate holding strategy, as there are many effective choices. Some feel fine holding in their own name with an umbrella policy.

Hope that helps!

Rafael

Rafael Norat, RN Business Management | [email protected] | 908‑419‑3665

I like the LLC for liability protection - but if your state recognizes land trusts- than I would suggest going that route. Same liability protection but with a cloud of secertcy plus in many states you it saves money on corporation taxes and set up fees

Is the question about holding real estate in a business name, as your post says, or financing it in a business entity, as the thread title says?  Because they are not the same thing.

The vast, overwhelming majority of single member LLCs provide no meaningful asset protection. Virtually everyone who owns one fails to sufficient separate themselves from management to have the theoretical protections of the LLC actually cover them. That is my problem with the LLC route; not that they are a bad idea, but that they have been "sold" to investors as a magic bullet when they most certainly are not.

Financing in an LLC prevents you from participating in the majority of available residential financing. You will need to be in the commercial loan space, with higher interest, shorter terms and higher down payments.

Thank you all for your responses. And yes @Richard C. I wanted to know more about financing a property under a LLC. I haven't found any reason to other than liability issues but as you said a LLC doesn't really change much when your the only member at least not in PA, if anything it seems to make things much harder since your limited in what kind of loan you can get. I guess I was really just looking for confirmation on what I've come to find.