Profile picture for heydave7

purchase investment properties with LLC or personal?

we're looking to buy several investment properties by putting 25% down in cash and taking out a 75% LTV mortgage for each property.  we would like to put these properties into an LLC.  my question is should we set up the LLC first and buy the properties through the LLC, or should we buy the properties under our personal name and later transfer them to an LLC?  Are there any things we should know?
  • July 10 2009 - Los Angeles
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Answers (4)

You cannot get a loan for 75% in a self directed IRA, so that response is incorrect.

If you are looking to get an immediate refi of 75% LTV, you are probably looking at a FNMA lender, which will NOT lend to an LLC.  So you'd have to buy it in your name, refi, then transfer to an LLC when it's all done.
  • September 21 2013
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Profile picture for Mr Caveat
based on the other statements you made, have you considered putting this LLC into a self-directed IRA? there are tax advantages... again accountant
  • July 10 2009
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Profile picture for Mr Caveat
this is a really bad idea...
  • July 10 2009
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Profile picture for Mortgage Brothers
Before you do either you should take a little time and compare financing alternatives if titled personally or in an LLC.  Assuming the properties are residential rentals the act of titling them in an LLC and borrowing in an LLC's name will require you to obtain commercial real estate financing whereas you may have otherwise been able to obtain residential financing assuming of course you're looking at purchasing residential real estate.

Commerical financing as a general rule has higher rates, shorter amortization periods, and in a lot of cases higher costs.

The typical reason people look at titling in an LLC is for liability protection, but that may not have full considered the financing changes this causes.  You may be able to achieve a comfortable level of liability protection simply through a very large umbrella liability rider from your insurance carrier, that is surprisingly cheap.

Residential financing rates for investment properties have become a whole lot less attractive than they were a year ago, so it may be that the residential financing and commercial financing is close to the same and therefore there may not be much downside to using the LLC (other than paying tax preparations fees every year for each LLC entity as everyone will require a separate federal and state tax return
  • July 10 2009
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