to sell or to rent

Pittsburgh, Pennsylvania
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to sell or to rent

Michelle Brigid
Pittsburgh · Member since 2024 · 9 posts · 2 votes
This is my first post here, so hello everyone. I've been reading through the posts and seems like this is the place to be for RE stuff.

I house hacked my way into my current primary residence, put significant work into renovations, and am ready to move for several reasons. The location of the house is ideal for downtown and the universities and hospitals.

Originally, the plan was to sell and reinvest the proceeds into a few fix and flips. However, the house is not selling, having me consider more than once to rent it out, tap into my equity, and purchase a fixer-upper triplex in another part of town (where I would also live). This would be the beginning of the brrrr method and I would have 3 rentals right away.

My questions are
1. is it better to start an LLC for RE and transfer my existing property into the LLC? 
2. how would it being a business asset impact tapping into the equity? is that just a different type of loan?
3. would it help to tap into the equity as an LLC versus individual if your credit is not great?
4. is turning it into a rental property sensible given that it's been on the market for 4 months now with little action? rather than drastically reducing the price and not profiting much?

I am interested in the LLC for privacy as well as all the other benefits of doing business inside a business, just not sure about transferring my existing property. It's also currently on the market, so assuming I'd take it off the market before any of this.

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  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    2y

    Hey @Michelle Brigid- you're not alone in terms of your property not selling. I would first dig into why it's not selling. 

    Not because it might be mispriced, or the area isn't seeing that much demand anymore, or any other reason - but because that will come into play when the bank does an appraisal on your property. 

    If you want to tap into the equity in the home, the bank has to decide how much to value the property on. And if the house isn't currently selling at the price you've set... that means the appraisal may come in lower too. 

    1 - Doesn't matter much at this scale of the business. Also transferring existing property to an LLC might trigged due on sale clause with your mortgage.

    2 - Similar answer to #1. It won't really matter until you try to secure another loan based on what you're going after. If you're going after fix and flips then you'll need real estate-flip loans which are short term and high interest - in which case they care more about the property/deal than how leveraged you are (but they do still care, along with how much cash you're bringing into the deal) 

    3 - Similar question, same answers above. 

    4 - Yes... sitting on the market for 4 months is weird UNLESS that's the norm in the area. No real specifics provided but if you share the address I can take a look and give me $0.02

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  • Michelle Brigid
    OP
    Pittsburgh · Member since 2024 · 9 posts · 2 votes
    2y

    Hi Mohammed, thanks for your response. Yes, I think my particular area it takes longer, or at least that is what the 3 realtors that I've consulted with said.

    As far as the loan, I want to tap into the equity rather than taking out a short term/high interest loan. So using my equity here to fund the next property. But yes, I hear that about an appraisal. 

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