How can I buy investment properties via an LLC?

Asked by Dave, 75248 Fri Nov 11, 2011

A partner and I are looking to buy condos in the DFW area. We would like to do through a LLC, but it has been a challenge to get financing. Is there anyway to make this work?

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T.E. & Naima Sumner’s answer
T.E. & Naima…, Agent, Dallas, TX
Fri Nov 25, 2011
It's called a personal guarantee. The corporate entity holds title, but you personally are guaranteeing the loan to be repaid.

Unless the corporate entity has assets besides the property you're anticipating purchasing, there is nothing for the lender to fall back on in case of default. You're putting money into the LLC to fund the expenses and down payment, but unless you're paying almost half in cash, most lenders won't finance the rest because of the risk of default.

A corporate entity that has practiced the business for a couple of years and has assets won't have a hard time getting a loan, but before then, the principals have to step and put their assets on the line. (This assumes the principals have good credit and assets to pledge.)
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0 votes
Hello I am interested in doing this with my LLC can you suggest who I would call for FL? Thank you!
Flag Thu Feb 16, 2017
Kenneth "Ken…, Agent, Dallas, TX
Thu Jul 4, 2013
I think the best thing is for you to talk with a real estate attorney. It is illegal and unethical for a Texas Realtor to give legal advice. Even though they do and can have ethics complaints filed against them for doing so through TREC.
1 vote
Investmentcl…, Home Seller, Dallas, TX
Tue Apr 9, 2013
Hi Dave,

Your LLC would not qualify for the mortgage loan as the LLC would have to qualify the same as an individual would. If you're a business owner, a limited liability company, or LLC, structure can protect your home and other personal assets from court judgments. But the house itself, as your personal home, wouldn't fall under such a corporate structure. But if you're getting into serious real estate investment, the LLC provides you many protections. Make sure that once the LLC is set up you apply for and get the equivalent of a credit report called a Dun and Bradstret.
1 vote
Sandhupetrol…, Home Buyer, Dallas, TX
Sat May 28, 2016
0 votes
thinz, Agent, Allenhurst, NJ
Tue Nov 24, 2015
Maybe you should consider putting the home in a land trust owned by the LLC??
Tom Hinz
0 votes
Kevin Polite, Agent, Atlanta, GA
Thu Nov 19, 2015
I'm not in the Dallas area, but I can tell you from personal experience that it is nearly impossible to get a loan from a bank through an LLC when just starting. Best to look for hard money lender, just google it and there are tons of legit ones out there, but the kicker is they usually ask for 12-18% interest, interest only loans with 3-5% points. That means you have to find a really good deal, have your team in place and begin immediately and know what you're doing construction wise. Otherwise you'll lose your shirt. But if you can make some money, don't quit your day job, you can start getting the experience and building your portfolio.
Don't listen to the no money down people, not saying that doesn't work, but out of looking at 100 deals you may find that 1 who will do seller financing. With the market they way it is now and the large equity funds paying cash it's like looking for a needle in a haystack with that model.
Best of luck.
0 votes
John Broussa…, , Houston, TX
Wed May 6, 2015
You can by investment properties under a LLC as long as the LLC is active and in good standing with the Secretary of State. We offer stated loans for single family homes and commercial properties. We also offer blanket loan on single family portfolios and commercial portfolios. Contact me if you are interested.

John Broussard
Newbridge Home Loans
713-777-9996 Ext 103
0 votes
Jim, Both Buyer And Seller, Norcross, GA
Wed Feb 4, 2015
Watch out the guy named Ricard - EI Bey.
He is a fraud. He cannot get you any loan at all. What he does is cheat your money for appraisal which he will never done. Once if he got the money, he will not answer your phone or email anymore. You can search at Georgia License website, he does not have license at all. Just a fraud.
0 votes
Richard- El…, Other Pro, Augusta, GA
Mon Oct 14, 2013
Rehab / Investor loans

100% purchase and Rehabilitation cost Loans Residential and commercial from 65% ARV with comps
Multiple properties at once
Blanket Loans
Cross Collateral deals
50% Cash Out loans Commercial and Residential
70% rate and term refinance
Nation wide
Foreign National s okay
10 - 14 day closings in most cases

Richard- El Bey
Avarice Investments
(706) 399-7813 cell
(678) 752-8062 Office
0 votes out for this guy people!
Flag Sun Jan 22, 2017
Flag Sun Jan 22, 2017
BenFluno, Agent, Dallas, TX
Sat Nov 19, 2011
I had a client in DFW purchase a duplex this year in the name of a new LLC. He was qualified based on his own credit and income but my lender was able to give him a loan with 20% down (standard for investment property now).
Ben Fluno
Keller Williams Realty
Dallas City Center
0 votes
Can you tell me who he used? I am trying to do the same thing now
Flag Fri May 6, 2016
Brian Rayl, Agent, Dallas, TX
Fri Nov 11, 2011
Jim hit the nail on the head. If your LLC has not been established long, then it will not have business credit, which makes getting a mortgage under the LLC very difficult.

If you purchase the home under your own name, you can transfer it to the LLC, but as Jim said that may trigger the Due On Sale clause. You would have to speak with a real estate attorney on the particulars, but I have had a couple of investors who do this regularly that have never had an issue. As long as the bank is getting paid, then they won't make a fuss, but it does increase your risk significantly becuase what if you are late a couple days on one payment? They could call the note due, which would kill your investment.

There are also hard money options to consider. It is higher interest rates, but you will get your money.

If you are in need of an agent in the DFW area, I would be happy to help you.

Brian Rayl
Keller Williams Elite
0 votes
Terry McCarl…, Agent, Cape Coral, FL
Fri Nov 11, 2011
You can buy in the name of an LLC but make sure you check with your insurance agent. In Florida, if you put the property in the name of an LLC the homeowners insurance will cost you more as you have to buy a commercial liability policy in addition to regular homeowners insurance.
0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Fri Nov 11, 2011
Sooner or later someone is going to suggest taking title and arranging financing personally then contribute the property to the LLC, technically that could trigger the due-on-sale clause because it alters the title. Any work around increases your risk.

I would ask why use an LLC? The corporate veil may not be as much safety as you may believe. But that is a question for your legal counsel.
0 votes
Ray Villanue…, , Walnut Creek, CA
Fri Nov 11, 2011
Yes you can, which lenders have you approached? It may be the condo you are buying...some investors are having a tough time with condo purchases, especially investors.
0 votes
Ray what if I want to get a mortgage to purchase a home but my credit score needs to be improved to avoid very high fees right now. Would it be beneficial to have my LLC buy a home outright then rent it back to me, or do a persnoal mortgage to me, to improve my credit score? It would still tie up the cash but I wouldn't be spending the money for a nonconforming high interest loan, or a secured loan through the bank. Thanks!
Flag Thu Feb 16, 2017
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