Not putting in your name...

General Real Estate Investing
1

Thinking of putting an offer in on an initial investment property.

I’m wondering if you can put the offer in under your own personal name and then transfer the name under which you want the property owned by to something like an LLC at the time of closing.

Due to the circumstances I probably don’t have time to setup the LLC prior to making the offer…but at time of closing and going forward from there I want it under a LLC.

Any problems in doing this and/or exposure to financial risk in this interim period?

Thanks for the consideration.

-Mike

2

Mike,

Normal procedure in this case would be to purchase the property in your own name and then move it under the LLC once established. This can be done relatively easily by just deeding it over to the LLC.

Some will argue that this may cause the lender to invoke the DOSC but that is HIGHLY unlikely…

Keith

3

Hi Keith,

Thanks…

This is a good starting point for addressing my concerns.

Later,
-Mike

4

When I purchased my last property I told the lender what I was intending on doing and they put a note in the file to that effect so that when I want to move the property to my corporation they already know about it and have approved it, so no DOSC and in fact they offered to help me do it by re-doing the loan in the corporation name with a personal guarantee once I got it set up.

Most lenders are receptive to this idea but you probably will have to give a personal guarantee to the loan on the property unless and until your corporation has been in existence for over two years.

5

Very simply put you write up the contract using your name as John Smith or Assigns. (Replace John Smith with your name) :slight_smile:

If you are questioned as to why, you tell them you may want to take on a partner or add a relative to the deed at closing.

Then you create an assignment letter from you to the llc and the llc’s authorized agent.

If the seller has signed the original purchase agreement they have already agreed to an assignment. They do not have to be notified or included in the assignment process.

An assignement letter is great. It states the assignee (your corp) assumes all the obligarions and agrees to the terms of the original contract.

CAUTION: Many standard real estate contracts haave a non assignment clause in them. It’s usually one sentence. Make sure it’s crossed out and initialed by buyer and seller(s).

I have a sample assignment letter. If you want a pdf of it, just ask.

Jeff

6

Hi Jeff,

Thanks for the tips…

If deal goes thru I’ll take you up on the Assignment letter.

Later,
-Mike