Asset Ownership within a LLC

[Julian Drew]

Hi all,

My business partner and I are looking to purchase our first property but just have a few questions concerns about how to structure the purchase within the partnership. I have heard that it is difficult to get a loan under a LLC and just wanted to get some advice on how others have structured their partnerships in order to purchase properties. Should we try to find a lender that will loan to the partnership or should one person hold it on their person books, or is there another method that I am overlooking? If you have any other general advice for structuring the partnership that would be greatly appreciated as well.

Thank you very much!

[David M.]

@Julian Drew

Do it right and work with a "commercial" lender. Legal entities are not eligible for conforming loans, e.g. FHA, conventional, etc. You want everything titled under the LLC for the limited liability protection especially since it sounds like you are investing with a non-spousal partner. You dont' want the loan in your names otherwise it affects both your credit serviceability 100% (its not split). With everything under the umbrella of the LLC, all the accounting and tax liability will be handled cleanly, and correctly.

Both of you will need to personally guarantee the loan since the LLC has no assets or history. That's normal. But, the loan / lien / DoT will be in the LLC's name.

Happy to chat.  Good luck.