I want to acquire investment real estate through an LLC company I want to start up. Now, my questions are:
- What limitations on loans do I have with my LLC?
- Does that make my loans Commercial because it is an LLC?
- Can an LLC still qualify for 100% financing?
- Overall, how how hard is it to acquire loans, as a start up LLC?
- And, if I acquire realestate through my LLC 1st, without yet buying a home to live in, will that kill any chances for “firts time home buyer rates”?
hope you guys can help me, and add anything else that I may have missed. Thanks in advance.
Look under the Asset Protection thread and you’ll find plenty of information on this topic.
Da Wiz
Yes, it is commercial if you buy properties in the name of an LLC. You can also buy under your personal name, and then quit claim the deed over to the name of the LLC, but this would be more for legal protection, because the mortgage would still appear on your personal credit. Also, if your LLC doesn’t have a credit history, you will have a hard time obtaining a loan, so get started on this yesterday if you haven’t already.
In addition to what has been stated regarding your post already: Commercial lenders will not lend 100% and only lend on certain types of property. Have you defined your niche…what types of property you will aquire and what you will do with those properties?
metalslug,
I disagree on the 100%. There are programs for certain properties (specifically, multifamily) that offer a 80/20 program. Of course, as previously stated, you may be able to close the loan in the name of the LLC, but you will still need to qualify using the documentation of one or more principals of the business.
From experience, on residential properties, I tell investors to make sure that are done with all the initial financing on a piece of investment property before transferring it to the LLC.
Generally, it is harder to transfer back to your individual name and have it in title long enough for a lender to allow good rates for a refinance. I hope this helps.
Thanks for all your replies, now I have another question. ok, I live in NYC, I have 20k in savings to spend right away, I also have about a 740-750 cred score. If you were to advise what and how to get into investing in RE, what would the strategy that you would best use with the stats I gave you. I really want to do this the best way possible, of course i will make mistakes, but I want to minimize as much as possible, thanks again.
My suggestion…
Start with single family homes that will pay for themselves. With a small cash reserve, you don’t want to get anything that is not already paying for itself. You will need your cash for closing cost and emergency reserves.
I see small multi fams here that are already occupied and can pay for themselves, and probably end up with a small profit each month. I guess, I can borrow partial monies from my bank, to cover partial closings.
slug,
Do you own your current home? If so you could apply for a HELOC and use that money to start your investment career.
If the seller will offer you concessions to cover the closing costs and property taxes then you’re in a better position. Even if there is left over monies from the concession, you can use it for upgrades.
Just a Thought,