San Jose, CA · Member since 2017 · 10 posts · 5 votes
Hi BP Family,
I would like to request for some advice.
I have purchased my first REI using my primary home's HELOC (purchased a small duplex) and I plan to utilize the BRRR strategy then refinance.
I would like to form an LLC but I would like to know if it is better to refinance the property first under my name then transfer the property in an LLC via quitclaim deed after cash out refinance? From what I have read, banks would not loan to new LLC's without proof of income.
Furthermore, I have inquired for a lawyer's assistance with LLC formation and he quoted me $2000 to $2,500 for professional fees. I am just starting with my investment and I am quite unsure if it is wise to pay that amount of money for a simple LLC formation as I only have one property for now. Please advise. Thank you!
Hollidaysburg, PA · Member since 2015 · 327 posts · 350 votes
7y
@Timz Valenzuela, You are moving in the right direction, and congrats on your investment! First off, you can refi into an LLC, but because it's new, the bank will look at you the same way as if you weren't using the LLC. That is, if you're able to meet the refi guidelines that the lender would require to refinance, your LLC will as well. This shouldn't be a problem for you.
In regards to your second question, I would not spend that kind of money for an attorney to create an LLC. That appears to be way over priced. I have created my own, had an attorney create several, and my CPA created some for me as well. I paid no where close to what they are asking. I would search out another attorney, or contact your CPA and have them give you prices. I hope this helps, and good luck!
Hollidaysburg, PA · Member since 2015 · 327 posts · 350 votes
7y
@Timz Valenzuela, You are moving in the right direction, and congrats on your investment! First off, you can refi into an LLC, but because it's new, the bank will look at you the same way as if you weren't using the LLC. That is, if you're able to meet the refi guidelines that the lender would require to refinance, your LLC will as well. This shouldn't be a problem for you.
In regards to your second question, I would not spend that kind of money for an attorney to create an LLC. That appears to be way over priced. I have created my own, had an attorney create several, and my CPA created some for me as well. I paid no where close to what they are asking. I would search out another attorney, or contact your CPA and have them give you prices. I hope this helps, and good luck!
Rental Property Investor · DFW, TX · Member since 2013 · 953 posts · 910 votes
7y
Price quoted seems about right for an LLC. Yes, refinance in your name then deed property over-some banks will let you refi using a LLC, you just have to ask. If they say no and you do it anyway they usually won't call the note but if they do, be prepared to have to refinance it again. Do not use a quit claim deed, use a general warranty or special warranty. Quit claims should almost never be used and it will be an issue when you go to sell it down the road.
San Jose, CA · Member since 2017 · 10 posts · 5 votes
7y
Now, I need to research more, @Peter M. One lawyer who quoted me for $3000 for LLC formation advised me to do a quitclaim for LLC title transfer.
Thank you!