All Forum Posts by: Thomas Manglaviti

I am looking to purchase a foreclosed property at auction in NY. Are there hard money lenders who will loan me this money if I am looking to use the property as my primary residence? 

My thought is to use the hard money to finance the purchase, take care of the repairs, and then replace the hard money loan with conventional financing. 

Raul, when you formed an LLC in another state did you also have to register as a foreign entity?

Also, if it's true that banks do not generally provide financing for LLC's what other options would I have to secure the conventional mortgage while also being able to use money provided by investors and set up an agreement to define profit distributions?

I work for a multifamily real estate investment firm out of New York as an acquisitions analyst, and from my experience/research I feel that I have a strong grasp on the analysis and how to identify target markets. I am now at a point where I would like to build my own portfolio despite having little capital of my own to contribute (I have been aggressively paying down my student debt over the years). I have reached out to family and friends to contribute capital and have been successful in getting them on board for my first project. 

For my first deal I am targeting a duplex in Texas in the $150,000 - $200,000 range. I would like to secure a conventional mortgage for the deal to cover 80% of the purchase price and finance $50,000+ for the 20% down payment and rehab using 10% of my own capital ($5,000 or so) and the remaining from family/friends. I have an excellent credit score and believe that I personally would be approved for an acquisition of this size. Originally I had thought I would create an LLC and sign for the loan personally so that I would be the general partner and the other investors would be limited partners, I would also be able to set up an operating agreement that would define how cash flows are paid to the investors (as the GP I would get a promote over a preferred return for assuming the risk and managing the deal). However, from the research I have done it seems that banks do not provide conventional financing for newly created LLC's, also if I were to create an LLC I am uncertain as to whether it would have to be in my home state of New York, Texas, or both.

Given my situation, which business entity should I use, which state(s) should I register in, and how will I be able to accept funds and pay distributions out of this entity?