Tax, Legal Issues, Contracts, Self-Directed IRA

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Joseph Gisler
  • Realtor
  • Wake County, NC
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LLC - Set up now with or later?

Joseph Gisler
  • Realtor
  • Wake County, NC
Posted Jun 1 2022, 17:33

I currently own two properties, neither in an LLC. I know for a hard money loan, I need to have an LLC, is that something I should set up immediately or will it be okay to wait until I have a property in mind? If immediately, do I run my rent through the LLC to create some history in the LLC or is that not necessary? I know this is very generic and can change depending on the lender but I thought I should get a general consensus before asking individual lenders.

Raleigh, North Carolina

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Taylor L.
  • Multifamily and Self Storage Investor
  • Richmond, VA
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Taylor L.
  • Multifamily and Self Storage Investor
  • Richmond, VA
Replied Jun 1 2022, 18:11

I had a discussion with Garrett Sutton (Robert Kiyosaki's attorney) yesterday - if I may be permitted to channel him for a moment I wager he would tell you to get your LLCs set up right away! All of the hard money lenders I'm familiar with would still look at your credit and qualifications, LLC or not.

Getting your properties properly set up in LLCs and umbrella insurance is best done sooner rather than later. You can form a new LLC for future acquisitions pretty quickly.

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Matthew Rice
  • Real Estate Broker
  • Raleigh, NC
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Matthew Rice
  • Real Estate Broker
  • Raleigh, NC
Replied Jun 2 2022, 09:38

Taylor said it perfectly!

Although it is often not a problem dipping your toe in a few investment properties first and then setting up your LLC (you can always quit claim deed those over to your new LLC name), you might as well get your LLC set up sooner rather than later since having an LLC at some point is inevitable for any investor looking for long term success.

Matt Rice www.newwestern.com/agent/matthew-rice/

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Joseph Gisler
  • Realtor
  • Wake County, NC
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Joseph Gisler
  • Realtor
  • Wake County, NC
Replied Jun 5 2022, 15:57

Thank you @Taylor L. and @Matthew Rice for the wonderful advice! I feel in the back of my mind I pretty much knew this answer but sometimes it helps to hear it directly from those who are ahead of you in the game. I will get on this this week and begin that process.

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Mike Klarman
  • Lender
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Mike Klarman
  • Lender
Replied Jun 6 2022, 10:57

Now. Don't wait. And also our UW team likes to see something in the Articles Of Organization about what the LLC is for. I tell people to put: This LLC is for all real estate investment transactions.

Depending on where you file, the paperwork can take a few weeks to get back to you.