LLC vs Owning Property In Your Own Name | Is an LLC Right For Me? | Mentorship Monday
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- Опубліковано 14 жов 2024
- Today’s Mentorship Monday episode comes from Cedric who is active duty Army stationed at Ft. Knox. Most of his properties are in a LLC (Limited Liability Company). However, he wants to know what to do with the property that he already owned in his own name. In today’s episode, Matt shares some information about owning property in your own name vs an LLC.
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Thank you for taking the time to answer my question. That was exactly the information I was looking for.
Cedric, You are so welcome! Thank YOU for submitting a question and glad that we can help you on your journey!
Hi Cedric, thanks for the question. It was helpful to me too. Thank you for your service
Derosa Group transitioning your Deed with quick deed you can void tittle insurance policy
This is a question thats talked about constantly thanks for answering it
Thanks! Love your thoughts, your awesome. Here's some free goodies. Just text DEROSA to 66866 for several hours of video training, articles, and other stuff you can't get anywhere else. Enjoy!
Smart and Helpful!! Thanks Matt!
Your welcome! If you like our content check out our Insiders Group on Facebook, it's FREE!! facebook.com/groups/DerosaInsider
Hi Matt, I'm getting started with RE investing. Love your videos, very informative. I have a question on this topic. I am looking to buy say a 4-plex. Initially I was thinking of doing this through an LLC (as you suggest in the video). However, if I do that, I will not be able to get a conventional (30 year fixed rate) mortgage, but can only get a commercial mortgage, since it was bought as an LLC. The conventional mortgage has some benefits like lower rate, no balloon, longer amortization (resulting in more cash flow), so I would prefer the conventional loan, but I also want to protection of an LLC. What are your thoughts? Thanks!
My wife and I got mortgages in our own names because I don't think they were willing to give it to our new LLC when we started out. We probably could now because we've been doing it for 8 yrs now and have a good history. All the homes were bought in our personal names and then we did the Quit Claim on them. No bank ever called the mortgage due. When I found out they technically could I kinda sweated it for a minute but kept my mouth shut and didn't call them asking questions. Leave well enough alone. LOL
Thank you so much for addressing this. I had the same question.
Hey Shannon, that's awesome, glad we answered it. I think many investors have similar challenges, odds are many questions you have are already answered on the channel in another video!
This was VERY helpful. Thanks!
SrVnDaNk you are welcome! if you have your own question email us at HelpMe@DeRosaGroup.com!
Derosa Group im on sec8 in a bad neighborhood please help me move...not safe here
Great info as always, Matt!!!! 1 related question, is it best to form in your home state? I live in NJ also ....
We follow our CPA's advice on this. He tells us to setup the LLC in the state where the property is. That way you avoid paying state taxes twice (one time in the state of registration plus one for the location of the property)
great video .keep up the good work
Thank you so much for your comment! Thanks for watching! :)
Great info. Thank you.
You are so welcome! If you ever have any questions, please feel free to email us at helpme@derosagroup.com! Happy to answer your questions on an upcoming episode! :)
Thanks for the info great video
I have a question? im planning to buy 4-plex. and i am planning to live in one unit and rent out the other 3 units. i am planning to get my LLC. since im going to live in the property should i buy it under my name since im going to live there for tax purposes or should i buy it under a LLC
Dawid Surowiec buy it in your own name so that you can get the most favorable mortgage terms. There are no tax advantages I know of for owning real Estate in an LLC. Its used more for asset protection, liability from lawsuits, and structuring partnerships with others.
thank you for the advice
You are welcome! If you have any other real estate questions please take a moment and submit it to HelpMe@DeRosaGroup.com!
Dawid Surowiec thank you for asking such a great question
This is exactly what I was looking for thanks for asking this question. Have you bought any other properties since then?
Excellent Video, just what I needed to know. Question is there a company you can recommend to use for creating My LLC? Thanks!
Cybertronian Home Maintenance I actually don't recommend using those companies. It's good experience to go to your local states website and register it there, then go to the IRS website to get your RUN. a local attorney should draft your operating agreement if you need one anyway, don't buy one off the internet those are cheap and won't help you at all if you have an issue and need to reference it.
Once you do the quit claim deed and need a bank to refi under the LLC, does that LLC have to have a credit history to qualify? does it work similar to personal credit? I have a rental I want to transfer into one of my LLC's, However I didn't think the LLC with no financial history would qualify. How is that done? AND should I start paying the bank from the LLC account? AND my rental is a Section 8, should they pay to the LLC?
Good question but nobody answered
I would like to know too🙋🏾♀️
Right! Lol. Would love to know the answer though
Currently I use a holding company/Parent Company which owns all my LLC’s. Parent company has the financial history needed for banking transactions.
Thanks good information.
Really like your videos.
Thank you for your support!! We have a lot of very exciting content coming soon!
How easy is it to put your LLC under a holding company in the future if you already have your rental property/ies in an LLC?
Hello. I have a similar question about LLC and SCorp. Im in PA, I started an S Corp earlier this year for a different business, but that business is not making lots of money, i know they say and i agree that i should have an LLC when purchasing properties for protection, my question is. Can i use my existing S Corp to purchase properties under prior to obtaining an LLC and just quit claim deed the properties over if and when i decide to buy and hold? Right now I’m only wholesaling but an opportunity for a short sale just fell in my lap, so i may be holding on to that. Thanks.
+Derosa Group - Great content. I assume if a property is acquired with cash in buyer's name, it's a much simpler process to transfer to llc? The reason I ask is that in my area, the avg rent is 450-600, yielding little to no cash flow. I'm not sure it makes since for an initial investment to add the cost of llc. Thoughts? Thank you
You are correct about the ease of transfer if you own it free and clear and in your own name, as long as you are the only owner of the new LLC. With regards to cost, it's only a few hundred so even in low rent areas it's still not bad for the protection you get.
Thanks for the help and speedy response!
Awesome thanks!
Your welcome!
This is good information. Only problem with buying investment property on LLC is all the banks / credit union I checked are saying no mortgage for LLC. Can you recommend any bank ?
We have had the most luck with community (local) banks. We work with both the Credit Union of NJ and 1st Colonial Bank here in NJ. Hope that helps!
Try a small community bank. Look around the area you are looking to buy a rental and find a bank that has between 5 and 10 branches total. No more than that and not a bank that has branches all around the country. They will gladly loan you money in an LLC.
Would you have an LLC invest in your DeRosa Group projects as opposed to my individual name? For instance I have an LLC with a property in it. Should I use that same LLC (or a new one) to invest in your projects?
If the LLC has a property in it I wouldn't use it for passive investments, it's mixing up "apples and oranges" from a business intent perspective. When you invest in a syndication you really don't need an LLC anyway, as the LLC that the syndicator sets up protects you from liability.
I'm about to purchase my first 4plex with an FHA mortgage and was wondering if it's still possible to do a quick claim deed in the future since there are special requirements with this mortgage?
Hey Kern - You can do a quit claim as that is an action that effects the Title, not the mortgage. You should however refinance it soon after you do the quit claim because you are changing ownership, which is a violation of the due on sale clause of the mortgage. That said, they will not find out unless you stop making payments. I know people that have quit claimed years ago and the bank never raised a concern.
Go for u....I'm about 2 do it as well
Brother how did it go. Did you ever close the deal?
Does this work in NY? Specifically Orange County?
I am puzzled by the insurance. I already have landlord insurance but when I call GEICO regarding general liability insurance, they said I should get umbrella insurance. I wonder if that's correct?
Umbrella insurance is just above your GL and hazard policy on your home, think of it as additional GL insurance.
What about insurance? currently it's in my personal should I get it into the LLC name?
It depends on who holds the property. If your LLC is on the deed, that's the name you need the insurance in.
i can tranfer my propeties to my daugter name if she is miner 16 years old in LLC.
I’m planning to purchase a duplex and rent them out. I already own my house under my name clear of mortgage. I don’t wanna do the same for my duplex and thinking to get an LLC. Should I get it before buying the duplex? Is this the right way to do it? I will be paying off for the duplex bcs I don’t like debt.
I would suggest you setup the LLC, then buy the duplex after. That way you can use the LLC name on the contract and close in the LLC. If you want to use debt you can go to a small community bank and get a loan. Another option would be to get a HELOC on the duplex you own now and BE THE BANK to your LLC that's buying the new duplex. Then payoff the loan from cash flow and other income streams. Then BE THE BANK again! You'll like debt much more when you are the one lending :-)
I bought a property cash and I did the BRRR Method and I want to do a cash out refi would it better to do it under an llc instead of my name?
Since you own it free and clear already it should be no big deal to move it to am llc before refi, which you should do for liability reasons. You won't get better financing but it will give you better protection
I heard if you show a lease with rental income it will offset your DTI ratio
As long as your mortgage broker is willing to look at it as income, you are correct!
What kind of loan terms shall I expect as good loan terms these days for a commercial loan to the LLC?
5 to 7 year rate lock, 4% interest, personal guarantee from the owner, 25 to 30 year amortization
@@DeRosaGroup Thank you! I am a little uncomfortable with personal guarantee. That means the protection from the LLC is actually gone, right?
what if you're obtaining a property out right no mortgage would you still want an LLC
Yes. Asset protection
What if you own the property and just pay taxes
You are still the owner on title, which subjects you to liability claims. That is why most people put their properties into an llc, for liability issues.
I owned 5 properties, do i have to do 5 LLC or can I put the 5 properties in one entities meaning 5 properties in one LLC?
You can put them all into one LLC as long as they are owned by the same people
Matt, if you've got 5 apartments would that be 5 different LLCs? Thanks.
You can hold all of that in one llc if you want, not necessary to break it up into 5 llcs
@@DeRosaGroup For liability purposes, shouldnt you hold it in separate entities?
@@latonyaclark8750 I think it depends on the business size and motto!
Thanks
Thanks! To hear more about what we are up to go to www.derosagroup.com!
Can you refinance out of your personal mortgage to your llc or Corp without doing the quick claim deed?
it is "quit" claim deed.
I have a question ? I have LLC name on the house. But now I want to under my name. How can I do? Thank you
You can do that with a quitclaim deed. A local attorney can do it for you
Thank you very much for your answer. But do I need pay tax and when I move in live?
You would need to talk to an accountant about that
Thank you so much my friend.
how do you make an LLC
Do you set-up an LLC per each Investment Property or do you roll all properties under one LLC?
We do one LLC and put a bunch of properties in it.
Too much tax reporting, minimum tax for multiple LLC's. We rolled everything into one LLC. Rental income properties, houses, apartment buildings. Worked great for 14 years.
Switching to a llc requires paying closing twice . That can be A big deal if you got 6 properties or so
Didn't happen to me. I sold 3 Calif properties in the last year.... What closing twice? It didn't happen.
LLC before first deal benefits?
mason ward there are no benefits to go LLC on your first deal. it will actually make things more difficult and cost you more money. that being said, if you plan on buying more than a few deals you will have to go LLC. if you don't do it on your first deal, you will have to convert that property to an LLC later which can be complicated.
Derosa Group I see, was hoping to "sell" my truck to the llc for write off was my thinking
Derosa Group I have a few questions for you ill,email
mason ward be careful about "selling" stuff to your company. might be better off contributing it as equity to the company, an owner contribution. talk to your CPA about it too.
Ok, I'll look into it. Thank you
Thank you for the interested content. In my channel I also discuss the difference between llc and sole proprietor as well as different business related topics that has been asked for many times to me. based on my own experience. I have just checked your video, nice content.
Thanks! Good luck with your Channel!
Why are you recording from a prison?
What about liability insurance vs an llc?
Good point. All LLC's should have liability insurance also, if you own in your own name liabiltiy insurance is a must.
liability insurance as in...an umbrella policy?
For me llc or no llc didnt make any difference. Wasted money hire them
It may not have helped yet, but it may if you get sued at some point
Sue America live in a sue alcoholic even in llc they find way sue. Live your life not in fear nothing can protect you beside God . Dont wasted money on llc. That only my opinion about llc . i know many join llc clan .. but true they cant protect you ..
Yh
Hey!