Financing as an LLC?

[Andrew O.]

Myself and a partner are going to take the dive into house flipping, and we were wondering if anyone has financed a house using an LLC? If so, is there any advantages or disadvantages to doing this versus financing a home under our names?

Thanks!

[Ben Stoodley]

Hi @Andrew O.

I'm sure there are threads on BP that go over the pros and cons of property ownership under entity VS individual. It's my understanding that the main benefits of holding title in an LLC are the tax benefits and liability/repercussion protection.

Regarding financing your flip, it all depends on what your plan is. If you want to buy a distressed property that requires significant renovations, a bank will not lend on it.

If you need to close on the house fast, a bank will take way too long. I'm located in San Diego, most investment properties receive 10+ offers, majority are non contingent cash offers! Very tough.

Hard Money does not care about title being held under an entity or an individual and it doesn't effect the rates. Hard Money is asset based, so your personal credit and financial strength is secondary. I underwrite about 100 deals a week, and in my experience about 95% of real estate investors purchase homes in a business entity, typically an LLC or Corp.

Hope this helps!

Ben