Hello BP Group!
I will try to keep this as short as possible....
I own a SFR in Northeast-Florida for 5 years. It has never been used as a rental.
House was paid for in cash and there is a very small “hard money” loan to pay off.
There is NO NOTE recorded on the property - it is free and clear title.
I intend to pay back the capital (plus interest) to the individual that lent it to me and she will transfer title to me (or my LLC, more on this in a second).
I already have a law firm/title company (Sheffield & Boatright) already drawing up papers for me.
The eventual goal with the property is to 1031 exchange it in to a MF income property.
I can turn it into a rental as soon as the small loan is repaid.
Before we can do the 1031 (one year from when it becomes a rental I have read?), I would like to HELOC the equity out of the house to have funds ready to purchase another property.
So my question is: can I get a HELOC loan on the house if it's in an LLC? Or does it need to be in an individual name?
Also does this whole plan make sense? Is there a better way to do all of this?
Thanks for reading and I look forward to your feedback! Jeff :)
(I hope I put this in the correct forum, if not let me know)
I assume this was not your primary residence since you could just do a 122 exclusion?
Confused about the “I have owned for 5 years” and “title will be transferred into my name....”.
HI @Wayne Brooks , thanks for the reply!
Title is in the name of the individual that loaned part of the money to purchase the property (the majority of funds were mine). We have a private agreement between us.
I know I didn't do this correctly, I should have put it in an LLC in the first place and had her take a note.
I hope this clears up your question. Please let me know any other thoughts........
@Jeff A. , Ordinarily I would say that you were probably OK to 1031 now. But that assumes that you had owned it as an investment for several years even though it had not been rented. But since you're just now taking title you would be wise to put a rentor in for a while. There's no statutory holding period but most folks feel a year is usually fine to demonstrate your investment intent.