Is using my LLC to purchase my first property a good Idea?

Question

Hello Everyone!

I'm a new investor and planning to purchase my first rental property next year around spring time. I am currently shopping for deals and practicing my math at the same time. I'm looking to fund my investment with a conventional loan or go the route of FHA loan. I'm looking to purchase a multi-family property or a single family home.

My questions is if I wanted to get the property through my LLC, is that a good idea for someone who is just starting out? Could it possibly make it harder for me to get a loan?

I wanted some advice on that and maybe a different approach I could take for my first property without putting much of my own money in.

Thank you in advance for the answers!

Anthoney Hanks · Answer

@Sokhna Wade, welcome to the BP community - wishing you success!

Tanner DeHart · Answer

@Sokhna Wade you could also look into getting a personal liability insurance policy, also known as a umbrella policy. This will provide similar protection without the operational hassle's of an LLC. But there are pros and cons to both, would recommend consulting with a tax/legal professional to decide what's best for your situation.

Justin Windham · Answer

@Sokhna Wade

It’s nice to have you here!

This is a great forum with very knowledgeable members that will help to guide you in the right direction.

I really like the alerts feature that can quickly guide you to current topics that may be of interest: http://www.biggerpockets.com/alerts

There are a few self-contained guides that you can access here: https://www.biggerpockets.com/guides

Malcomb Stapel · Answer

If you try to purchase it with your LLC many banks will require you to go with their commercial product. This could mean, in some cases, more than 20% down, 15 year term, etc. You will generally be able to secure much more favorable terms if you do the loan in your own name. Depending on the lender I have heard as many as 4-10 mortgages in your personal name before you are maxed out. Also, it will be a simple thing to quit claim them into your LLC at a later time of your choosing.

Sokhna Wade · Answer

@Malcomb Stapel

Ah okay I see. That makes a lot of sense. Thank you so much!

Julio Gonzalez · Answer

Welcome to the community, Sokhna!  You found the right place for information.

Santiago Marquez · Answer

@Sokhna Wade interesting question you’re asking. David Greene has a podcast episode 513 called BRRRR 101. In it a question was asked by someone who was BRRRRing a multi-family but did so under an LLC. Perhaps you’d find interest in it. I believe it was about the 2nd or 3rd question asked. Def a great episode to listen to.

Is using my LLC to purchase my first property a good Idea?

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