My wife and I are wanting to buy and live in a cash-only REO house that is non-financeable , but pull our cash back out to keep flipping. The plan is to buy the Cash-only REO using our LLC, fix the health and safety issues in this home (which will then make it financeable), and then purchase the house with my approved 150k residential loan. So I would be buying my home from my wife & myself. To be clear: the goal is to be able to use my approved bank loan to purchase a cash-only property in order to get a good deal. Does anyone know if this is legit?
Once you purchase the property from the bank why do you have to then sell it to yourself? Why can't you just refinance it and pull the cash out? Secondly, why are you purchasing it through an LLC? Wouldn't it be easier, cheaper, and safer to purchase it as yourself? The LLC, I don't believe, would allow you to put homestead protection on the property. I see no reason to set up an LLC at this point. You have no real liability and you will just be incurring more expenses with tax returns and filing fees and attorneys fees.
I am not an expert on accounting, but you will be paying Closing costs twice? Deed, Title co, etc
Why don't you just buy it under your name and refi? or HELOC.
You might have issues with seasoning if you hold property in your LLC and then convey it to yourself to refinance (as will likely be required). They might make you wait 6 months.
Wow, thanks for all of the fast replies! This is a very friendly & active community.
@Rob: We are about to sell our second flip, and already created the LLC after some advice from our friend who is a tax advisor and accountant. So we were just trying to figure out a way to sell it to ourselves.
Thank you Rob, Javier, and Christian. I'm not sure why we didn't think of doing a refinance. But that is obviously the easiest and best choice. Thanks for saving us some time, energy and money!
Join the Largest Real Estate Investing Community
Basic membership is free, forever.