All Forum Posts by: Addam Driver

Hi @Wesley C Smith,

I did what you are trying to do twice in the past year.  I used BB&T.  

They didn't do a "Quit claim" they did a "limited warranty deed". On paper I "Gifted" the property to my LLC and I personally guarantee the warranty for all of 5 min. while I owned the property.

It goes like this:

- Get loan with the lender to buy the property

- At closing (BB&T requirements) do the limited warranty deed transfer to your LLC

Result:

You own the loan and the business owns the property.  It will not trigger the "Due on Sale" clause because according to my BB&T Banker, they recognize people starting businesses and they want to be "Business Friendly".  Not all lenders do this and like @Kevin Romines said, Fannie n' nem do it now.  

Notes:

I suggest doing the LLC IF you are running a real business and not just trying to protect assets. It makes it more worth while with all of the setup and management of the LLC in my opinion. As @Richard Sherman mentioned, getting a good umbrella loan is an alternative.  I have both an LLC that has it's own policy and an umbrella for myself and my wife.  I'm running an investment business with different allocations so mine is a little more complex.

Hope this helps!

@Alex Bekeza dude!  I'm from CA (SFV).  Great information!  Thanks for sharing.  I have a MUCH better understanding now.  You all are awesome! Thanks!!

@Stephanie P. I had no idea there could be a rule for 150 miles.  Great stuff.

Hi @Alex Price !

I'm looking at something like 10-22 units.  There's an 18 unit building I'm looking at (out of state) and another 22 unit building I'm looking at (in state).

Hi @Elenis Camargo!

I have 6 units (3 duplexes) now. I'm looking to go after big game. Two were purchased around the same time and using the BRRRR strategy, my refinance numbers are pretty good. So instead of buying more of those, I am considering an apartment building. It's unfamiliar territory to me. That's why I was asking.

Hope this helps!

HI BP!

I'm looking to purchase my first commercial apartment building.  I know financing is different from standard residential units however I'm not sure exactly what I should prepare for. 

My questions:

How does financing typically work?

What are lenders looking for?

Anyone care to share their experiences?  

Thank you in advance!

Hi @Rayn 

You are welcome!  Yes you should contact them and see if they will let you.  From my experience it's only been able to happen at closing but again, that's my experience.

Here are some ways you can establish your LLC since you already have the property.

1) Have all rents and expenses (mortgages, etc.) paid out of that to show money coming in/out.

2) Get a CC under the business name and use it to pay for all business administrative and random RE costs.

3) Get a "Corporate Account" with someone like The Home Depot.  They report to the D&B so you will show business credit there as well as the regular 3 credit agencies.

4) give it time!

Hope this helps!

-Addam

HI @Ryan Hansen,

What @Mark Bookhagen said is completely true.  It is common for investors to have their properties in LLCs, however there are some steps to be taken before that can happen.  

Example:

1) If the LLC is an already established business (filed at least 1-2 years of taxes, making money, assets, etc.), it is easier for that LLC to purchase property as it would be for an individual.

2) If you are purchasing a property cash, you can do it through an LLC because there are no income requirements other than the monies to pay it off.

3) If you are starting out for the first time and the LLC is new, you would need to find a lender (I used BB&T for this) who will allow you to purchase the property under your name and do a limited warranty deed to the LLC at closing without triggering the "Due on sale" clause.

In scenario #3, you would own the loan, but your LLC would own the property. You'd still have the standard LLC protections but NOT from the lender as you are responsible for the payments. The GOOD NEWS is that after a year or two of showing your LLC was the one making the payments, some lenders will allow you to move that loan into the LLC as they have been honoring the agreement. At that point, your LLC is established and your DTO and credit are freed up of that debt.

I'm currently doing this with 2 of my properties. It's a good way to get your LLC established.

I hope this helps!

-Addam

HI @Steve Gee,

Like @Brian Garrett said it is difficult to give any input/advice w/o knowing the details of your first deal.  

I will say this... IF you have a mortgage that is $xxx, remember that by you paying it off sooner will only save you the monthly payments.

Example:  

$350 mortgage + a $70k pay off probably wouldn't be the best use of $70k.  You will be spending $70k to save $350 a month.

OR

$70k as a down payment on another property that will bring you $450+ in cashflow, would be a better use of the cash on hand in my opinion.

Hope this perspective helps!

-A

Hey BP!

Now I know that underwriters need a BUNCH of information to confirm finances.  But some of this is ridiculous.  I'm working on purchasing a Duplex.  I've been uploading all necessary documents.

The underwriter has come back with another list of stuff.  Most of it is reasonable, however here are some that are making me question their competence.  Can someone clarify WHY this would be necessary or am I just trippin'?

1) Signed and dated letter as to why your LLC. was created.

- Really!?  

2) Provide a signed and dated letter from your CPA (on company letterhead) conforming that you don't file tax returns for your single member LLC.

- Wait... (they have my filed tax statement) Single member LLCs are disregarded entities that are treated as an extension of it's owner.  Further more why would I file twice!?