I’M VERY CLOSE TO GOING AFTER MY VERY FIRST PROPERTY. I WILL BE INVESTING IN APARTMENTS AND SOME SINGLE FAMILY HOMES. I’VE BEEN DOING ALOT OF RESEARCH AND I’M CONFIDENT TO TAKE THAT FIRST STEP. AS CONFIDENT AS I AM I’VE BEEN HAVING MONEY SETBACKS. I WOULD LIKE TO BORROW FROM A HARD MONEY LENDER TO HELP PURCHASE MY FIRST PROPERTY HOWEVER, DO I HAVE TO HAVE MY LLC BEFORE I PURCHASE MY FIRST PROPERTY??? I KNOW IT WOULD BE A WISE CHOICE BUT IF I CAN MAKE THIS DEAL HAPPEN I’LL HAVE ENOUGH MONEY TO MAKE A GREAT BEGINNING.
I’ld say if you can afford to, do it. Its well worth it.
separate it from your personal properties. cost me about 500 for getting the work done.
One you get the first few deals i like to separate them in groups into different LLCs cause if something goes on and a tennant sues, they can only go after the business assets.
If you have 20 homes in one LLC then all 20 homes are potential victims… if you have them separated in 4 groups of 5 then you only will have 5 properties suseptible. So then your other 15 are protected. Nice bit of insurance. Kinda like Altria and Kraft, Altria owns kraft, but if someone died from cheese only Kraft could be sued, Altria’s other areas aren’t available. Like philip Morris.
YOU’VE REALLY PUT IT INTO PERSPECTIVE FOR ME, I WILL GO AND GET MY LLC FIRST. THANK YOU.
ANOTHER QUESTION. HOW MUCH DOES A PROPERTY HAVE TO COST BEFORE A HARD MONEY LENDER WILL CONSIDER WORKING WITH YOU??? CAN IT BE AS LOW AS 40,000 OR AS HIGH AS 200,000 OR MORE???
I know that in my few experiences, when the amount was lower more points were just rolled into the loan to give them their earning.
One deal was 39,000 in sweethome oregon. I was trying to set up the funds for it, it had a ad septic so traditional banks said no. Homes of equal portions sold for 89,000 easy, anexing and sewer connection was all that was needed for around 20,000 so going with the 60% arv was easy to do. But use the amount was lower more points were added to th total so i had to pay the amount back plus 6%
usually it gets worked out for the better. As long as its a return for them. They’ll do lower, you’ll just need to pay.
Well Johnny Q, my heart is very much into this. I’ve been studing on my own for almost 2 yrs now. I live in NC near the fayetteville area and all of the real estate groups that I’ve been able to find are at least 2hrs from here. So I’m on my own for the moment. I read alot and listen to cds and do alot of online searching for any info concerning real estate investing. I’ve also gone to some seminars but so far thats about it. We are a military family and have moved around quite a bit but I believe we are going to be here for a long time. I still have alot of learning to do but theres only so much one can do in a book, I’m ready for some hands on. Any information you offer will be appreiciated.
Is that always the case? I was under the impression that just starting an LLC isn’t a magic shield. If he sets up an LLC, and hasn’t even done a deal yet, and gets sued doing the first one, that LLC is a bullet proof protection as you have described?
I always thought the courts tend to treat something as it truly is, not what you call it, meaning just because you spent $500 on an LLC does not mean that you are now totally shielded. More elaboration would be helpful as I’m a little unclear on that.
Tax write off. hah, ok, so you spend thousands on the deal and don’t get the writeoffs for that like. Everybody is different, i did repairs on the property around 5000 dollars worth, and didn’t have that llc in place and it was considered personal improvements. Lifestyle.
so… 500 write off… 5000 write off. If you don’t have the money though, get the deal done first so you can afford it.
You mentioned investing in apartments and SFD’s, but will that be long-term rentals or flips? The hard-money is great for short terms, but for long term rentals consider getting seller-carried loans, or even conventional loan so you don’t need to charge a higher rent just to make $$ for the hard-money lender.
just a note for all who cares!
Getting a LLC is not just to save in taxes. The point would be to protect your personal assets from your business assets. Building business credit also has advantages too. You could get funding for you business and it is alot easier once you do a few deals. Establish business credit cards and loans while maintaining a good credit rating could change your life for every.
To the finance compainies willing to help me get my feet off the ground, thanks but no thanks (at this time). I went to go see these properties, all 3 properties are in severly drug and prostitute invested areas and the 8 unit bldg had no tenats!! As excited as I am about getting into this business, I’ve done enough homework to know better. Just cause it sounds like a good deal doesnt always mean it is. Anyway, I’m lookin for somethin at least 80 - 90% occupied. I’m going to continue looking. Thank you for the support and advice.
Does deals are the best because you get it at a super discount price and then you clean them up.
After you upgrades are done you raise the rent and run out the rats.
Its has been investors cleaning up neighberhoods not the Government.
Just offer them a rediculous price and you would be suprise.
Don’t get emotionally attached to property, look at the numbers and see if they work.
I still think now its a better deal.
Thanks for listening and I may be a little off point but i hope you get the message.
I’ve seen some debate on just how much protection an LLC offers. When you get one they give you a brochure that gives enough scenarios to imply it’s not exactly bullet-proof… but they also say it’s better than nothing.
I began with an LLC and then later decided on a corporation. Not because of layered-protection, but because I have mutlitple revenue sources and wanted simpler bookkeeping for tax reasons.
Having business credit is a great thing, if nothing else the great amounts and also the airline miles. Capital One gives a $1/1-Mile credit. If you funnel even $10,000 a year through your business card a year… hello, Hawaii! I have a friend who has over 300,000 miles saved up. He’s in Cabo San Lucas right now and could go back another 8 times if he felt like it.
I know of business that put each piece of large equipment into it’s own LLC. That way, if there is an accident involving the piece of equipment, the LLC has very limited assets; more importantly, very limited potential losses.
Like everyone has said, get the deal then get the LLC. The costs ($$ and time) of the LLC aren’t worth it unless you have something to put into the LLC.
I have a friend about to loose everything because him and his wife had to sign a gaurantee. You are right it does not protect you from everything but it eventually will protect your personal credit and the beauty of it all is if you LLC goes bad all you do is start another and start fresh with another business account. You will never worry about telling your wife we have to move into a apartment because the irs is going to take everything we have because a Buyer defaulted and you took all the equity out of the property. To invest in another or what ever the case may be.
“LLC is just to protect your personal Credit” You must Register with DB street and set up a Business account and thats it.
That depends on what loan program you use.
What would be the point of setting up an LLC if you can not seperate you personal assets from your business. Of coarse you could sign a personal guarantee but it’s crazy. You have to protect your family assets and that should be the last thing you do.
I may not be a guru when it comes to Real estate investing but I know Business and I would personally guarantee any deal unless it is absolute necessary and i know i can cover the deal without harming my personal assets.
That’s just my professional opinion as a ERO TAX Business Owner.