Need entity for our fix and flip loan

[Chris Momongan]

I am about to apply for a fix and flip loan for my next project. Most hard money lenders will only lend to entity. Is it as easy as going online and paying $100 for LLC? What are other things I should be considering. The next project is taking a SFH and turning it into two units. I need a loan that will cover 100% of rehab and only hard money has those products.

[Doug Smith]

Hi @Chris Momongan, We ask for different things depending upon the entity. For LLCs, we'll ask for your Articles of Organization, your fully-executed Operating Agreement, your Certificate of Good Standing by the State you organized in, and the SS-4 form from the IRS showing your tax IS number (EIN). The articles are easy enough. Most people forget the Operating Agreement as in a single-member LLC they don't really feel like they need an agreement with themselves. I know it sounds stupid, but pretty much every underwriter is going to ask for it. You can make one on Law Depot or Legal Zoom for pretty cheap. If you have more than one member, you might want to have an attorney draft it to protect yourselves from each other. Every joint venture starts with everyone singing kumbaya, but they often devolve. That agreement will protect everyone, so for a multiple member LLC, you might want to think about having an attorney do that for your future protection. The Certificate of Standing is just something that you can usually do on line. It's just a way for the State to collect a fee. Yes...it's dumb...but it's what underwriters want. Finally, when you first set up your EIN on IRS.gov, you'll get a download/letter that shows your EIN. You'll want to save that. Somtimes they will also want Meeting Minutes/Unanimous Consent from the LLC showing that the business has officially OK'd the loan. Those things are what we look for. I hope that helps.