Question Details

Tony, Home Buyer in Melbourne, FL

Can a corporation (LLC) own residential real estate?Our bank representative said it was no problem...so we

Asked by Tony, Melbourne, FL Mon Jan 7, 2008

went through all the steps and are ready to close soon. Now the mortgage person at the bank says we'll have to buy it in a personal name. Our tax person says that to buy it personally and sell it to the business for cheap would cause tax problems.
Is it possible that no residential real estate is owned by a corporation? Seems hard to believe.

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Although an LLC or corporation of just about any type can OWN property, securing a mortgage is another story altogether. The corporation or LLC must qualify the same as an individual would in order to secure a loan. Since a corporation or LLC is an entity to itself, it must have credit, assets and liquidity the same as an individual would. Some lenders will lend with a guarantee from the officers (Read: Co-sign) yet, shy away from all but long established, well known and very liquid entities. Real estate loans ARE NOT readily available for new or small corporations without a guarantee from one...or all of the corporations officers.
2 votes Thank Flag Link Tue Jan 8, 2008
OPPS...This question was posted Jan 2008.
0 votes Thank Flag Link Sun Feb 2, 2014
Tony, this is a issue more complex than can be covered properly by strangers on the internet. You have HIRED folks to look after you concerns. If you don't TRUST them, you should fire them..............What you can and can not buy AND the consequences of that purchase depend on:
1. Structure of LLC. For instance, is the LLC funded via a self-directed IRA?---------
2. The purpose for the purpose now comes in to play. Will it be investment real estate or owner occupied, family occupied, ect.----------
3. Your tax structure. What may be legal may prove to be costly.----------
4. Future intent, such as buying addition real estate, and the number of purchases.---------
5. Future intent, such as is your intent to HOLD the property to generate cash, will you resell to other investors?-------------
6. Future intent. Will you be selling real estate to owner occupants?----------
7. Will you offer owner financing?-------------
8. How may transactions do you anticipate annually?----------With a doubt, your responses to these question will make your choices and options highly complex. The very small peek you've allowed us regarding your situation is completely inadequate to judge if you are getting proper guidance. What we can be assured of it the folks standing near you know A LOT MORE about your situation than the 83 words you shared with us.
0 votes Thank Flag Link Sun Feb 2, 2014
The lender doesn't' know what their talking about, An LLC can own real estate, I've done it many times, However you're going to be paying a higher interest rate and will probably be required to put down 25%. In addition every member of the LLC may need to sign a personal guarantee on the loan negating any real advantage to taking ownership in this manner. You should discuss with your attorney the reasons you're interested in taking ownership as an LLC rather than individually to see if you're really getting the advantages you trying to get, you may find out there's little advantage to taking ownership in this manner.
0 votes Thank Flag Link Sun Feb 2, 2014
can a Delaware holding LTD buy a property in Florida ?
0 votes Thank Flag Link Sun Feb 2, 2014
When looking to secure a mortgage using a corporation, I would recommend sticking with a major institution rather than a broker. Major institutions (Direct lending from the likes of BofA etc.) may have more familiarity in dealing with the complexity of lending to a corporation. The bank you use would be a good place to start. From them you will be able to get a good idea of what to ask a "loan broker" if it becomes necessary. Mortgage lending to a corp is quite involved and is not something I would leave to an everyday mortgage broker and it is still quite difficult unless you are a major corp. Even then, it can be quite a process. Anyone who tells you different, right off the bat, is someone to avoid for sure. I wish you the best of luck in your ventures!
0 votes Thank Flag Link Tue Jan 8, 2008
Thanks Christopher!
Now that makes sense. It's not that we can't own it...it's that a mortgage may be difficult to obtain.

The bank rep simply made it sound as though our LLC couldn't own the property so we should decide which name to put it in and move forward.

I think we'll be shopping for mortgage brokers before making any other move.

Just to ask....anything to look for or stay away from with mortgage people?

We have 2 LLCs. The first is the "real" company that's involved in manufacturing and internet sales. The second is one we established to buy the building we formerly rented. The first LLC has plenty of assets. That's why we are looking to purchase real estate as a long term hedge for the future. We could just buy the property with a check....but were advised that a mortgage would be a better idea.

Thanks again!
0 votes Thank Flag Link Tue Jan 8, 2008
many are owned by llc's. it should not be a problem.
0 votes Thank Flag Link Mon Jan 7, 2008
Tony,

The last time I sold a property to a LLC, the required down payment and the interest rate were higher. However, we did not have any problems completing the transaction.

Corporations can and often do own real estate.
0 votes Thank Flag Link Mon Jan 7, 2008
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