All Forum Posts by: Erik Larson

Bummer I missed this :( See you in March?

Hi all, I'm new here and have started taking the steps towards my new future, leaving the 8am to 11:30 pm IT career behind. I've started getting my ducks in a row and was hit with an idea by my banker of all people.

I'm opening a HELOC at 3.5% on my house that's paid off, it's significant enough I should be able to do 2 or 3 deals "all cash" from the HELOC money (this is to build my funds and make me some money in the process).

My banker (that's doing the HELOC and biz bank account (whence I get my LLC set up, another question about that in a min) suggested I can "lend" my LLC funds for an all cash purchase at say 10%. This would be a 6.5% income to me personally. I know this can be done as it's been mentioned many times all over the net but can it be done with a charge interest rate to my LLC. And does anyone know how you would report that. I plan on writing off the interest from the HELOC personally.

I plan on doing all cash flips in 3 to 4 months each, plan being this:

Pull funds from HELOC transfer to LLC account. Say property ARV $200k, Purchase price $130k, Rehab $15k, Other costs $2k. (total seat of the pants numbers just to use as an example)

I'd like to try this 2 ways: 1 "Cash" to LLC $150k loaned at 8-10% (or just 3.5% if it's not feasible to profit from the loan interest) or 2 $135k loaned to LLC, most rehab costs on a 0%apr personal card (not sure if this is even suggested or the first level of mixing funds, or if I can use that card "as the LLC", more so the card would be in my wife's name who might not be in the LLC unless she's the manager)

I'm not sure if one or the other is better for taxes or just more paperwork. This is my plan for at least the next 2 to 3 years until I have enough cash on hand to keep it in the LLC and pay myself a salary plus dividends. Eventually a separate LLC for purchased rentals down the road.