Can I set up a shelved LLC? Does anyone know if it’s possible and if it would really help establish a history when it comes time to refinance a property or apply for company credit.
you can purchase them, but I have doubts whether our not there is any real benefit to doing so.
The only real benefit to these kinds of entities is that the EIN application doesn’t have your information associated with it. No lender is going to loan money to an entity without a personal guarantee unless the entity has other assets as collateral or solid income stream. I wouldn’t pay any more for a shelved entity than a new one.
A potential issue is that there are some crooks who used shelved corporations to run tax scams and the IRS will investigate you while it investigates the company.
The reason we are considering a Shelf LLC is we are concerned about when it comes time to refinance a rehab. Our thoughts are the Shelf LLC will show some seasoning.
seasoning is irrelevant.
On a commercial loan, the cashflow of the property will qualify for the loan (or not) and probably require a personal guarantee. On residential and smaller deals, you will have to qualify for the loan yourself even if title is held in the entity.
Either way, seasoning of the entity doesn’t matter.
How can we qualify as our returns are from Canada and we will not have a regular jobs to show the lender. I am under the understanding that we can own and start an LLC in Texas but how to qualify for financing of the deals with down payments yes but no docs to show on paper??
On a commercial loan, the cashflow of the property will qualify for the loan (or not) and probably require a personal guarantee. On residential and smaller deals, you will have to qualify for the loan yourself even if title is held in the entity.
If you cannot qualify personally because of job change, no income, whatever, then you look for “no doc” or assumable loans. You can find “no doc” loans for both commercial and residential properties, but expect to pay more.
seasoning of the entity is still irrelevant and will not change the requirements to get funding.
Thanks
So, it wouldn’t help to have a shelf LLC instead of a new LLC if we applied for company credit at let’s say Lowes or Home Depot?
I bet it doesn’t matter. They will probably require a personal guarantee.
Yes from my understanding it will and does help.
Having the 2 year history is the thing that makes the difference and the whole point to buying a Shelf Corp or Shelf LLC.