I was told by a private lender told me we could purchase a property through our LLC and rent it to ourselves for a few years then buy another house and keep renting the first one to a new tenant or refinance into a new loan. I may not have all the details exactly right but is anyone familiar with this?
@Marquita Hightower it sounds like you're starting out in RE investing? Not sure of the advantages of buying under the LLC will be when you can most likely get a more favorable loan product and lower interest rate with a personal mortgage rather than what will be a commercial loan under the LLC.
I'd suggest picking up a househack 2-4 unit property; you all can live in 1 unit and rent out the remaining. Have tenants paying you to live there for a few years and building you equity, then when you're ready for the next property you'll have more capital and more cash flow when you all move out. Meanwhile, you could save the "rent" you'd be paying and it'll be a nice down payment for the next one.
Thank you so much!
I think he is trying to find a way to help us buy a house since we are self employed without having to pay 20% down payment.
@Marquita Hightower The LLC would most likely require a 25% or higher down payment. Whereas you can get a personal FHA loan for 3.5% down payment, however you'll have a LOT of docs lenders will be requiring to prove your income as self employed. You'll want to show your personal income by getting your bank statements, LLC financial statements (income statement, balance sheet, P&L, etc), and more.
Thank you so much! So I keep hearing their are loans for self employed borrowers that don't require 20% down but I have yet to find one. I will keep looking. Thanks for the advice. 3.5% down would definitely be ideal
Ryan definitely gave you a great piece of advice. Look for a 4pmex because banks will still give you a personal loan on it and it is not considered a commercial property. Anything over 5 and more doors are commercial (whole different ball game). Live in one and rent the rest out. Take advantage of the personal loan for the first unit.
@Marquita Hightower - buying in an LLC name won't make it so you can put less money down but it will allow you to buy a property without having W2 income.