If you’re reading this, chances are you’re already hip to the benefits of forming a limited liability company (LLC) to manage your real estate investments. But you may not know that not all LLCs are created equally. How beneficial your LLC structure is to you depends heavily on the state where it is formed.
Browsing: Limited liability company
These past two weeks have resulted in an influx in calls from concerned clients regarding…
In my last article, I described an investment tool—syndication—and how one could benefit from its utilization. Perhaps syndicating sounds appealing and you would like to know more. If that’s the case, read on and dig deeper into the little-known world of syndication.
In case you missed last week’s article, a syndication is simply a group of like-minded investors that pool their resources together in order to participate in investments larger than they otherwise would have been able to alone. In real estate applications, members within a syndication take ownership of an income property proportional to their capital contribution. Thus, if a $100,000 cash outlay is required purchase a property and syndication member Bob contributes $20,000 to the cause, he will hold a 20% interest in the property.
How to take ownership in real estate syndications
The theory of syndication is easy enough to understand. Where things start to get tricky is during the formation of the legal entity. I will discuss some of the commonly used ones in syndications.
Today’s article is part four in a five part series, where I will be shedding light on the various methods available to close REO wholesale deals and get around the “No-Assignment” clause that most banks include in their addenda.
This week, I will be talking about using an LLC to wholesale your REO properties to your end buyer.
Using an LLC to Wholesale
If you decide to use this method to close your REO wholesale deals, you will be making your offer to the bank in the name of an LLC, creating the LLC if/when the bank accepts your offer, and then selling your membership/ownership in the LLC to your end buyer in exchange for your wholesale fee. When using this strategy, you are not selling the actual property to your end buyer, but rather the LLC which owns the contract to purchase the property.
While visiting the Starting Out Forum here on BiggerPockets, I read through a thread titled…