Thank you for this info! I needed a few more pointers. Not only did you hit on what I was looking for but you also taught me something else in the process!
Thank you for all that you do. Quick question: If I have a primary residence that I’m in living in with equity and I take HELOC to fully pay for a new investment property, can I use the rental income to pay back the HELOC without negative tax consequences or would this be considered a co-mingling of business and personal assets? How best to handle this situation? Thanks again.
Not at all. This is not co-mingling. Co-mingling occurs if you use the LLC to pay back your HELOC. Also the tax consequences do not change with your strategy.
@@janediva3992 you can pay yourself from your LLC by a check or distribution transfer to your personal account , which is completely okay. , all your money flows to you personally anyways when it comes to taxes. Co mingling is when you are paying for personal things from your LLC (debit/ credit card transactions)
Great info! Say in the worst case scenario: for one reason or another the property purchase in the name of the LLC becomes an expensive liability (e.g. structurally unsound or a rental property nobody wants to occupy). Is it possible for the LLC to declare bankruptcy with no financial liability to the individual operating the LLC?
What’s a Freddie/Fannie loan? Is it a mortgage bank loan for example a property is $500k and you put $100k down and get a $400k mortgage loan which you pay off in monthly payments and pay back in years?
To answer your question in it’s simplest form, yes. A Fannie/Freddie Mortgage means that the loan meets certain requirements and therefore Freddie Mac & Fannie Mae back the loan in the event that you default. So they are organizations that back the loans your Chase’s, Wells Fargo’s, Bank of America’s, Regional Bank’s, Community Bank’s, etc.. of the world so these banks can lend to us borrowers. Hope this helped if you haven’t already done the research.
Hey Clint, what about a New Mexico LLC instead of Wyoming? I never hear you mention New Mexico at all. New Mexico doesn't require annual reports so you can just buy a few NM LLCs to keep on the shelf at no yearly cost and they never expire. What's your opinion about that?
New Mexico is good option. The only drawback is the charging order protections is not as strong as Wyoming. Wyoming has made the charging order the exclusive remedy for creditors so I find this more attractive. With that being said, if you wanted to set up a NM LLC to be the trustee of a land trust the no annual fee is a bonus.
Excellent video as usual. I have a WY holding LLC, and plan to create an operating subsidiary LLC in North Carolina. Which LLC should I close in for the NC property? -Thank you
Thank you for this content. I am about to buy my first property in Vegas as rental property, making 20% down and take loan out from a local lender. So basically, form an LLC registered in NV then buy the home (close the loan) under the LLC. Did I get it correctly?
Hi Clint - thank you for the information!! Question - is there a specific entity classification that is beneficial for the LLC when buy properties (e.g. Scorp, Partnership, Corporation) or do we use it as a disregarded entity that is 100% owned by one person?
This would depend on how many people are involved in the LLC as members. If only one - then disregarded but more than one it is typically set up as a partnership. Keep in mind these are general rules and they might change based on whether you are married or using a holding LLC. If you would like a FREE 30-minute consultation to discuss it in more detail, you can request one here - aba.link/30minSession
This is awesome information! I live in Ca but I am looking to buy a multi-family in NJ. I will not be living in the propert but I belong to a credit union in NJ and want to try a portfolio loan. Does this mean I would be able to close as an LLC? Also I think I should have my llc in DE but I'm confused on the part where I am buying my property in NJ and what I need to do... do I create a 2nd llc or holding? in NJ?
Thank you for all your amazing info. Quick question, if we closed on an investment property with our llc does it matter where we send the wire transfer for the down payment? Can it be sent from our personal or account, or does it need to be sent from our business account?
Not at all unless it is an REO deal and the bank requires the $$$ come from the LLC. I ran into this issue several years ago when I was aggressively buying bank owned properties.
Good info sir. Maybe I missed it but my question is can any llc buy property? Or does it have to be a real estate llc business ? I'm in Maryland and my wife and I are starting a cleaning business llc. Thank you in advance
Yes an LLC can buy real estate. An issue you face could be purchasing property if you are using financing. With Freddie/Fannie loans you can not purchase in a LLC. Cash purchases or portfolio loans are ok when purchasing in a LLC.
When you deed the property over to your LLC the loan will still be on your credit report? Can you move the loan to be under the LLC, and not under your credit report?
You could possibly move the loan but I have not seen it done with residential. The loan will continue to show up on your credit because you are a guarantor.
What if any......remedies REAL Cestui que vie setty kay 1666 I have ownership of a livibg trust...limited company..... baptismal certificate....proof of life. Any advice guys? Bod
Great video, thank you! When purchasing with an LLC, does the loan (debt to income) show on your personal credit or the credit of the LLC? Is there a way to decide which to put it under? I am trying to think ahead if I want to purchase multiple properties but the debt to income is too high or a recent purchase is shown.
If you do not provide a guarantee then it shows up on the LLC. Second, if your LLC assumes the responsibility of the loan some lender will not count it against you.
So it is allowed to set up an LLC solely for the reason to purchase real estate? Does that particular LLC have to be profitable for the lender to borrow the money?
The LLC is not typically purchasing encumbered real estate. If you can get a lender to loan to an LLC then whether you have a signed lease agreement may or may not be important for the loan.
If I set up an LLC to buy a property Where I’m planning to live how should I transfer money to the LLC bank account?What are the rules that apply to such cash purchases?Do money need to sit in LLC bank account for a certain time?Do you need to proof where this money came from?I know that whenever you deposit cash banks required to report such transactions to IRS.
You should take the down payment out of your LLC and let it sit in your personal checking account for 3 months to season the money. This means you do not want to go under contact for 3 months on a property to make sure the funds are seasoned. That being said, if you pull money out of the LLC you will need to explain it to your lender and jump through some more hoops to get the deal across the goal line. I have done it both ways and the seasoned funds approach is much smoother process.
Do you have any vids on which type of business property to buy? Storefront? Residential zoned business and converted to business inside? Building with business downstairs and live upstairs? I dont want to lease a commercial space storefront and pay $2k a month for something I'll never own
You need to open a bank account but it does not necessarily mean you must open a WY bank account. Consider Chase or BofA. When opening the account, if you are not in WY you will need to provide a local address to the bank e.g., if you live in Texas you will give the bank a Texas address.
Virginia allows you to use a company as your register agent vs listing yourself. Will that pose an issue with the title company if you list another company vs yourself? Do you know if showing the operating agreement would suffice as you suggestion with using a Wyoming LLC?
So if the structure is DE LLC -> say FL LLC, the FL LLC should have the cash in its own banking account and the loan and eventual purchase would all be made by the FL LLC? When rent is paid to the FL LLC, should the cash be transferred from the FL LLC to the DE LLC bank account and then taken out by me? Banks often like seeing cash in the LLC account for two months - any way to get around that with having to create these new llc's all the time for new properties? Do you just make the offer from the DE LLC then?
If you make the offer from the DE LLC then you will need to close in the DE LLC unless you write up the offer with "and or designated entity". However because of the seasoned funds issue you may still be required to close in the DE LLC if that is where your closing funds are held. If you plan to purchase in FL then set up a few LLCs and fund each of them with the expected DP and make the offer in the name of the FL LLC.
Question. If I already own a property had a private lender, mortgage paid off but have LOC. As well as second house with a small mortgage and LOC Can I open an LLC and put both houses in the same LLC?
What I would like to know is, if I create an LLC is it required that I put my rental properties under an LLC for me to claim it as a business? Meaning I own 3 rental properties that I might or might not be able to transfer into an LLC because as every video says the lender might not allow it for X reasons and if I do they might recall the loan. I want my rental income to be recognized as business income and I want to be able to be free to move my business anywhere I want and have the bank recognize that also for future loan qualification. Can I still have an LLC to use in order to process the way I do my taxes regardless of whether my rental properties are transferred over to that LLC on title?
The lender can accelerate your note if you deed your real estate into an LLC. In 23 years of practice and thousands of deed transfers subject to a mortgage, I can only think of 4 instances when a lender accelerated. These dealt with the investor falling behind on taxes or the mortgage. If you want the protection of an LLC then you will need to transfer the real estate into the LLC directly or use an land trust and assign the beneficial interest.
This will depend on the lender and the type of property you are purchasing e.g., residential versus commercial. Most likely the lender will run your credit when you purchase with an LLC. Also when buying with an LLC most of the time it is an asset based loan so the lender is looking at the real estate and not the LLC itself unless the LLC has some other business it is conducting.
I'm a little lost and maybe someone can help me. I want to purchase a 2 family house with a conventional loan for the purpose of having it as an investment property n gimme rental income. I am not gonna use an investment property type loan to acquire it tho cuz that will make things more costly. I think it's smart to separate myself personally for protection so I was thinking of setting up a Nevada LLC. The house I would buy will be in NJ. So what i want to know is how should I go about beginning the process from pre approval to closing. Should I and or can I for best protection make LLC first and use then LLC from start to finish? Or under my name do the the whole process of acquiring the home THEN if it possible or legal put the house under ownership in the LLC? Please any input helps
I have two properties now in my name with hard money lender, looking to refi with community bank in 2 months on both. How should I proceed with Arizona LLC and the Wyoming anonymous LLC? Which should be set up first and how do I tell the refi community bank that I need the loans to be in these LLC, and not my personal name? Thank you!
See if the community bank will refi the properties if held in a LLC. To create the structure you must first set up the WY LLC before you create the AZ LLC if you want anonymity.
Hey Clint amazing information. I would like to know would it be possible to use my business LLC to buy a property and turn it in to a daycare in NYC using the grant that the city is currently offering. How long does this process usually take if I would be able to?
Yes you can set up another LLC to hold the investment property. You would not want to hold the property in the same LLC where you run your trucking business.
Thanks a lot for the video! I have an LLC set up in NY and I am looking to buy a property in NJ. Is this alright for tax reasons? I don't want to be paying taxes in 2 states if this can be avoided. Thanks!
So if paying cash, should I make the offer in my name or in the name of LLC? I think you only mentioned “close in llc”. If you can see this, that would be great. Thank you so much
how is it possible for the LLC to be anonymous if your own name is listed as the member/manager in the operating agreement as you say at 5:17? i remember you adamantly warning us in another video never to list your name as any party in the documents for the anonymous LLC... but here you say that you will be listed in the operating agreement so im a a bit confused..... will listing yourself as the member/manager in the operating agreement not reveal your identity ?
if i buy a property using traditional financing with a partner and we have an LLC with us as the owners and members of it, do the same rules apply in regards to warranty deed? Also, what about the due on sale clause?
Yes and the due on sale clause is not an issue if you did not buy the property and declare it was going to be your personal residence I.e., owner occupied.
Thank you for great content. I am hitting some walls here- can I buy a rental property in North Carolina with the Florida LLC? Or does it need to be a North Carolina LLC? Thank you…
If i form an llc in Wisconsin with my name on it, and purchase a property then transfer the llc to a umbrella from Wyoming without my info on it, is there any downside? Would i still have liability for that property?
The WY LLC would need to be registered in WI if it is renting the property so this would blow your anonymity. Better if you set up a WY LLC as the member manager of a WI LLC and hold the property in the WI LLC.
Question: We have a business LLC that is a home based marketing and staffing company. We need to purchase a home for US to actually reside in and run our business out of. Could we use our current LLC to purchase our next home? Thank you! Good informative video. Thank you!
No you should set up a separate LLC for the house you are purchasing. Keep in mind, how you set up this LLC is important because you do not want to jeopardize your 121 exclusion with a future sale. Also if you are using financing you should wait until after the purchase to consider such a strategy.
Good day sir, I’m a low income earner who’s struggling to make ends meet. I used to have an Airbnb business in the same property I live with my family. But l have had issues with that. Now trying to get separate property for the business, what advice can you give regarding that since all financial institutions are requesting 20% down payment as against the 5 to 10 , and about the name to use to buy the property? Thanks
Look for a non qualifying mortgage that will lend up to 90% LTV and 100% rehab if you need it. I just interviewed Rainstar Capital Group yesterday and the video will be up in a few weeks discussing these mortgage options.
BOA said I could not buy a home in my LLC name and said I had to have 2 years worth of business taxes to use the income as part of my application is this true?
Yes and no. Generally - BofA will not allow you to purchase in an LLC because it is a residential mortgage and Fannie guidelines do not allow for this. The 2 years of income is a requirement since 2019 and it does not matter if it is an LLC holding real estate or in your personal name.
Thank you Clint. I am looking to buy a small apartment complex with owner finance and do not want my name associated with the transaction. Is there a way to do this and still own the property?
You should open up an LLC for the business and a separate one for the real estate. Only the mortgage interest is deductible. You can deduct the rent your daycare LLC pays the real estate LLC but its a wash because you will pick it up on the income side.
Yes. The purpose of the living trust is to avoid probate upon your passing or to allow your trustee to control your assets if you are incapacitated. If Your LLC is not owned by your living trust then you will lose these benefits.
Hey Clint. I thought we can’t put a house into an out-of-state LLC. I want anonymity but how can that happen when buying a home in AZ? Would I have an AZ LLC own the property with a WY or DE LLC owning my AZ LLC?
Love your content/ information. I am so so new to this and looking for assistance. I’m looking to purchase with no personal guarantee (PG). I have an LLC that has been established with great BD scores and funding. But it also has my name all over it (VA). Can I purchase a rental apartment or home with my current LLC and switch it to a Wyoming LLC down the road? My personal credit isn’t where it needs to be. Is that even an option? After hearing you say don’t do things backwards. I also have a hard money option but they need the LLC to be established for more than 3 years.
If I want to purchase with cash and I plan to use as a cabin and have anonymity, How would I do a few things. Ok so I Form a WY LLC, have the offer be written in the wy llc as buyer, accepted it's cash so I act as manger of llc to sing docs etc. Now how would taxes be paid? They forward to which address? Then I need to open a bank account in the WY llc to pay taxes? I'm in minnesota Would love more in depth thanks.
Taxes would be paid by the LLC and you would need to use a virtual address. If you want anonymity you really need to use someone to set the entity up for you that will provide these services.
Hi i am a Realtor I want to start real estate investing under a LLC, do have to tell that info to my broker, and do i need to do my LLC in WY as my base, and have other LLC set up in different states.
Question!! I would LOVE to get started investing into real estate and becoming a rental property landlord. I do not have money for a down payment though.. what do I do? Traditional financing through a Wells Fargo type of bank?
Look into an FHA loan for little to no money down. Keep your monthly expenses in mind though because usually the more money you put down, the cheaper your monthly. And on the flip side less money down, higher the monthly costs.
Hey There, im an international property investor looking to purchase real estate in the USA. as an overseas investor would this asset protection strategy still be viable or what would be the best structuring for a foreigner to use? Cheers
If I set up an LLC in Delaware but purchase property in another state, do I need to pay taxes in both States then ? The website for DE is saying they require an annual report and franchise tax each year $175 Or $300 in taxes yearly. Thank you
When just starting an LLC and buying real estate all cash, do you have to write out a check to your LLC and have your LLC in turn pay the seller...or can the owner do that directly on behalf of the LLC?
