New LLC to purchase out of state

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 683 votes
    1d

    Joseph, forming an LLC by itself doesn't remove the need for a down payment or closing costs on a purchase. For a South Carolina townhouse held in a new LLC, the paths people usually compare are seller financing, bringing in a capital partner for the cash to close, or an investment loan that still needs money down and typically a personal guarantee on a new entity. Each route has different underwriting, legal, and tax implications, so I'd line up the all-in terms against the property's expected rent and expenses before locking anything in.

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    • Joseph AmicoPro Member
      OP
      Real Estate Agent · Boston area · Member since 2024 · 12 posts · 6 votes
      1d

      Hi Devin,
      I plan on putting 20% down as this will be strictly an out of state rental. My question is about how to structure the deal? Do I use a new LLC because it's out of state? Also what address do I use since the LLC would need to be formed prior to closing?
      Thank you

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  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 684 posts · 287 votes
    1d

    I'd be careful here, @Joseph Amico. The LLC is the easy part. Closing with no money is the hard part. An LLC helps with liability, but it doesn't replace good insurance, and lenders will still want your personal guarantee. Most conventional loans need to be in your own name. To close in an LLC, you're usually looking at a DSCR/investor loan, which often means 20–25% down.

    A brand-new LLC with no credit history and no cash is a tough sell. If you really want in with little cash, you could house hack it and use an owner-occupant loan (FHA is 3.5% down), ask the seller about financing, or bring in a partner for the down payment. I'd steer clear of "zero down" schemes though. One vacancy or a roof repair can sink you. Also check the HOA rental rules and get an insurance quote before you commit.

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  • Marc Del Priore
    Lender · Philadelphia, PA · Member since 2024 · 61 posts · 17 votes
    1d

    Hi Joseph, a brand new LLC with no credit history usually makes a no money close hard on a South Carolina townhouse, because most DSCR and investor loans still look for 20 to 25 percent down and a personal guarantee on a new entity. The paths that can work are seller financing, a capital partner for the down payment, or a gap partner behind a first loan, and each one changes the underwriting, the exit, and the cash flow. We are Royal Partners and we arrange DSCR and investor financing for out of state purchases like this. DM us the townhouse price, the expected rent, and the HOA rules and we will give you straight numbers on what close looks like.

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 683 votes
    1d

    Joseph, for an out-of-state rental I'd decide on the borrowing entity with the lender and closing attorney before the offer, since loan programs can differ on whether a newly formed LLC can be the borrower and whether a personal guaranty is required. The LLC's registered-agent/office address is generally separate from the property or mailing address; check South Carolina's filing instructions and use a qualified in-state registered agent if required. Make sure the contract, loan, deed, insurance, and entity documents match the intended structure, and ask your attorney or CPA about liability and tax treatment.

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  • Owen RosenBusiness Member
    Professional · Clinton Township, MI · Member since 2015 · 714 posts · 268 votes
    18h

    Insurance agent here: if the townhouse closes in the LLC, the landlord policy should name the LLC too, or claims get messy. Ask the HOA whether the master policy covers walls-in or just the shell, since that decides what your unit policy has to pick up. Get that quote before you go firm. Happy to provide more assistance by DM.

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  • Redgy Saint-Germain
    Developer · Boston, MA · Member since 2017 · 255 posts · 135 votes
    4h

    Joseph,

    fellow Mass guy here. Before forming anything, confirm with your lender that they'll close in an LLC. Having 20% down doesn't automatically mean the loan allows it, and you don't want to discover that right before closing.

    I'd have the South Carolina closing attorney and your CPA compare forming there versus Massachusetts, including any registration or tax obligations back here. A South Carolina registered agent needs a physical address there, but that's separate from the LLC's mailing address. Ask which address each form actually requires rather than using one address everywhere.

    Once the structure and borrower are approved, line up the entity documents, EIN and bank account with the closing attorney. I'd settle those pieces before moving the purchase money.

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