It's a Family Affair!

Financing, Hard Money Lenders, Private Money
1

Hello,

I am new to investing and am trying to purchase a rental property (duplex or 4plex) in Texas.

I’m buying the property with my Dad and my brother. Everyone will put an equal amount down and my brother will more than likely live in a unit (since he’s in college, this will work out great for him).

Do we form an LLC or Corp? If we do, how do we secure financing? How do they check credit and such? Or do they check the credit on each member and then give the financing to the LLC??

Thanks for your time!
Andrea

2

Andrea,

Is the property currently being rented? Does it have a strong cash flow? This will make the process easier. There are lenders who are concerned with only one thing: can the property service the debt at least 1.25 or greater. When it comes to financing, forming a corporation is good, but the financing will still need a principal guarantee. Give me a call and we can explore all the options.

keith

3

Two thoughts:

  1. I assume the goal of your brother living in the property is to buy it owner-occupied. Most lenders, if you buy it owner occupied will not allow non-occupant co-signers. In other words, if you are going to try to do it owner occupied, your brother would have to buy it on his own.

  2. If you want to form an LLC or Corp, this will protect you legally, however, you can’t buy it in the name of the corp as a residential purchase. You would have to personally buy the property, and then deed it into the name of the corp after closing. The mortgage would still be in all of your personal names. If you want to buy it solely in the name of the corp, it would be a commercial loan.