First BRR Deal Question on Personal or LLC
Member since 2020 · 2 posts · 1 vote
First BRR Deal Question on Personal or LLC
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Member since 2025 · 111 posts · 123 votes
1yI would most definitely encourage you to do so through an LLC rather than yourself personally. I know, shocking that an attorney would push for more paperwork, but it really is by far the safest route. Especially as you are knew to the process from the sounds of things this will help ensure that if you do run into problems, if there are damages, if liability arises, etc. then the liability will be corralled and stay within the bounds of the LLC and not affect the rest of your life and personal assets. Now, in order for the LLC to really provide protection you want a good operating agreement, proper paperwork (deed in the name of the LLC, contracts naming LLC, etc.), and to maintain the corporate veil (i.e. open a bank account for the LLC and business expenses go through there and not your personal bank account). You can certainly move money from your personal account to the LLC bank account, that's a contribution and acceptable - just don't buy rehab supplies from your personal account or your kids clothes from the LLC account.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
6 Replies
- Member since 2025 · 111 posts · 123 votes1y
I would most definitely encourage you to do so through an LLC rather than yourself personally. I know, shocking that an attorney would push for more paperwork, but it really is by far the safest route. Especially as you are knew to the process from the sounds of things this will help ensure that if you do run into problems, if there are damages, if liability arises, etc. then the liability will be corralled and stay within the bounds of the LLC and not affect the rest of your life and personal assets. Now, in order for the LLC to really provide protection you want a good operating agreement, proper paperwork (deed in the name of the LLC, contracts naming LLC, etc.), and to maintain the corporate veil (i.e. open a bank account for the LLC and business expenses go through there and not your personal bank account). You can certainly move money from your personal account to the LLC bank account, that's a contribution and acceptable - just don't buy rehab supplies from your personal account or your kids clothes from the LLC account.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication. - Member since 2020 · 2 posts · 1 vote1y
Thanks Jason I appreciate the feedback! Do you know if it is usually harder to get traditional financing with a good interest rate when doing an LLC versus personal or about the same?
- 1yTy CouttsBusiness MemberLender · Denver, CO · Member since 2022 · 467 posts · 230 votes
Congrats on exploring your first BRRRR! Love that you're diving in with something close to home; that familiarity can be a major advantage when you're getting started
For your first deal, especially if you're not planning to scale quickly and are using conventional financing, it usually makes the most sense to buy in your personal name — and here’s why:Most traditional lenders (especially for BRRRRs using a purchase + refinance strategy) offer better terms, rates, and flexibility when you buy personally. Loans to LLCs often require:
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Higher down payments
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Higher interest rates
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Commercial underwriting
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More experienced borrowers
Since this is your first deal, buying personally keeps your financing options wide open — especially when it's time to refi.
You're asking the right questions, and this "test drive" approach with your first BRRRR is smart. Focus on getting this deal done cleanly and profitably — you can always layer in LLCs and asset protection strategies as your portfolio grows.
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Feel free to reach out if you want help mapping the BRRRR financing steps or setting yourself up for a smooth refi later!
Ty Coutts - Aslan Home Lending 544 Reviews -
- Member since 2025 · 111 posts · 123 votes1y
@Kyle Williams - In my experience it is harder to get traditional financing using an LLC vs simply in your personal name unfortunately. Many of my clients choose to get the financing first (lower rate, easier, less expensive), wait a few months, and then transfer the property into the LLC that will hold it long-term. So long as you are the owner and controller of the LLC you likely won't have to be concerned about an acceleration or due-on-sale clause for the loan.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication. - Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 501 votes1y
@Kyle Williams - Going in your personal name can work for your first several properties, but then due to Fannie/Freddie guidelines you'll start to reach a maximum number of loans (~10) once your portfolio grows. So, if you're planning on scaling at some point it will make sense to buy with LLCs. Good Luck!
- 1yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 505 votes
It depends on what works best for your individual situation regarding income and credit. Conventional loans that are underwritten by Fannie Mae or Freddie Mac guidelines will not allow you to use an LLC to buy. These are based on your debt to income / DTI ratios.
Another option is a DSCR loan. DSCR loans won't use your income to underwrite the loan.
DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.
Here's a bit more in detail about how rates are calculated for DSCR loans:
1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.
3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.
4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.
I've included an example below to help illustrate this.
So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.
See example below:
DSCR < 1
Principal + Interest = $1,700
Taxes = $350, Insurance = $100, Association Dues = $50
Total PITIA = $2200
Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91
Since the DSCR is 0.91, we know the expenses are greater than the income of the property.
DSCR >1
Principal + Interest = $1,500
Taxes = $250, Insurance = $100, Association Dues = $25
Total PITIA = $1875 Rent = $2300
DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.
DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.
Happy to connect to discuss further.
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