can you fiance on an LLC ?

17 Replies

Good morning all, 

Few months ago a closed on 2 4plex and recently a duplex but I got these done with conventional loan and the other hard money.

I was trying to buy under an Entity but the 3 guys I'm working with for lending side told me no one will loan to entities. 

So the 2 4plex I just granted deeds to new entities. 

I've heard you can purchase under LLCs, I've been told they have to be established with 2 years of taxes etc. But if just filed them 

it is impossible. I just would like to buy straight from the beginning with LLC.

has anyone encountered this problem and if so, how did you handle it ? 

If you were able to buy under an LLC how did you do it, just want to get around this as we will continue to buy but

if I can buy under LLC from begging even better, is what my CPA told me.

Oh and btw I'm in the Los Angeles, CA market 

hope to get some feedback from people who have done it or actual lenders 

thank you all

Yoni Rios 

A Hard Money Lender should have no problems lending to an entity. Most of our loans for instance are to an LLC (with a personal guarantor).

Cheers.

Originally posted by @Yoni Rios :

Good morning all, 

Few months ago a closed on 2 4plex and recently a duplex but I got these done with conventional loan and the other hard money.

I was trying to buy under an Entity but the 3 guys I'm working with for lending side told me no one will loan to entities. 

So the 2 4plex I just granted deeds to new entities. 

I've heard you can purchase under LLCs, I've been told they have to be established with 2 years of taxes etc. But if just filed them 

it is impossible. I just would like to buy straight from the beginning with LLC.

has anyone encountered this problem and if so, how did you handle it ? 

If you were able to buy under an LLC how did you do it, just want to get around this as we will continue to buy but

if I can buy under LLC from begging even better, is what my CPA told me.

Oh and btw I'm in the Los Angeles, CA market 

hope to get some feedback from people who have done it or actual lenders 

thank you all

Yoni Rios 

Different lenders will have varying requirements for any sort of LLC history. But it is definitely possible to use new LLC to get a loan. You can look in the commercial lending space or the hard money lending space, they will both lend to an LLC. Hard money will usually have the least restrictions. Fortunately there are many options for investors today for both short term and longer term finance options.

With some searching and phone calls you can easily have multiples options to choose from.

thank you all for confirming it is possible.  Wanted to make sure it was. Now time for me to do 

my homework and make some calls. 

@Paul Higbie

@Marcos Paulo Cerra will give them a call and research them, thanks 

@John Della Bella does it matter the state in which I invested ? any state regulations 

@Benjamin Hurwitz yes, I was going to purchase with hard money but was scared because the loan guys that i'm working said even for refi, need 2 years of income (the LLC). Then I was going to be stuck without being able to Refi. My fault for not searching enough.

@Caleb Jordan yes, thanks a lot for the clarification Caleb, I will definitely need to make more phone calls.

Appreciate the valuable information

Originally posted by @Yoni Rios :

Good morning all, 

Few months ago a closed on 2 4plex and recently a duplex but I got these done with conventional loan and the other hard money.

I was trying to buy under an Entity but the 3 guys I'm working with for lending side told me no one will loan to entities. 

So the 2 4plex I just granted deeds to new entities. 

I've heard you can purchase under LLCs, I've been told they have to be established with 2 years of taxes etc. But if just filed them 

it is impossible. I just would like to buy straight from the beginning with LLC.

has anyone encountered this problem and if so, how did you handle it ? 

If you were able to buy under an LLC how did you do it, just want to get around this as we will continue to buy but

if I can buy under LLC from begging even better, is what my CPA told me.

Oh and btw I'm in the Los Angeles, CA market 

hope to get some feedback from people who have done it or actual lenders 

thank you all

Yoni Rios 

 Hey Yoni,

There are actually a few things I would bring up to you in this situation. While only a few lenders will allow you to purchase a property directly into a new LLC, and generally at a worse rate, you can use a Land Trust to bypass the issue. You are able to purchase the property under your personal name retaining the favorable financing options, then transfer the property into a Land Trust  (which is excluded from the Due on Sale Clause since it is considered an Inter Vivos Trust and protected via the St Germain Act) and assign the beneficiary as the LLC to hold onto the liability protection.

The other issue you will run into in California is the additional franchise fees, minimally starting at an annual $800 per LLC [and per child series.] The best strategy to help you have liability protection while not having to pay incredible amounts of money annually is to implement a Delaware Statutory Trust into your asset protection strategy. You can also check out this article on the topic.

Just touching on different ideas. If you have more questions on any of these just let me know and I can swing back and flesh out the concepts more fully. 

@John Della Bella thank you very much for your information. Let's stay in touch, I'm sure we can be good use for one an other. Again thanks 

@Scott Smith thank you very much for this very valuable information. We did in fact grant deeds to new LLC on 2 4plex I had and was also excluded from due on sale clause, took that route but man, I had never heard of the

DST. This is something very new to me, and of course. like you mention would help on the $800 we automatically pay each year. Very interested on this topic.

Man I was stunned by your article on the DST. I need to look into this. thanks for the valuable information Scott

@Rick Taldykin   not quite yet, I will be looking into that in a couple of months, just have to increase rents on 2 other units to appraise at peak.

@Account Closed   awesome, those are good numbers, lets stay in touch