LLC or Seperate Investors

[Brett Barry]

Hi, 

My business partner and I are looking to start investing in multi-family rental properties in the Western Massachusetts area. We are wondering whether or not to stay as two seperate investors and both buy individual properties but use our combined funds, or start an LLC and get everything under one roof. Does anyone have any experience with this type of situation? I'm sure there are pros and cons to both, we're just not sure what they are. Thanks for any help you guys can offer!

[Eric Brickley]

Brett, speaking to just the lending aspect of your goals... Once you form a LLC and purchase in the name of a business you are going to need a commercial loan. If you purchase the properties in your names then you can use traditional financing. Traditional financing offers lower rates and more flexible terms. As Peter already suggested sitting down with a lawyer can help you determine if the benefits of the LLC outweigh the risk of going without. I will say that many of the investors I work with buy their first few properties with the traditional financing and then later form an LLC. Traditionally financing is only offered on your first 10 properties. Every property thereafter must be a commercial loan. Good luck with your endeavors.