LLC versus no LLC, Mortgages with LLCs, etc.

[Chris Lucas]

Hi, everyone!

First post alert!

I am looking to do my first two deals simultaneously (one 4-plex, one duplex, same town) and would like some advice on a few items. Ultimately, I will be talking with a CPA to discuss strategy but just wanted some general feel on my path forward before I get consulted.

• My wife and I are preapproved for the amount of both properties, but I am thinking about starting an LLC, or some legal entity, to shield my home/W2 income/savings/etc. Is it simple enough to buy the property under my name and then transfer the property to a legal entity like an LLC?
• Speaking of LLC, it seems that the biggest issue with forming an LLC is the up-front work to do so and the separation of the financials? Am I missing a big downside here? My wife and I make good money and have significant (for the average 30-something) assets, so I am thinking this is a no-brainer, but perhaps I am missing something?
• And, I am going to plead ignorance on this one, but if I do create an LLC, does the financing of future deals rely on the credit of the LLC, or of the owner(s)?

Really appreciate the help! I have been a big fan of the podcast, the books, and the forums for a long time and finally decided to take the plunge.

Thanks!

Chris Lucas

[Upen Patel]

@Natalie Schanne Thank you for the mention.

@Chris Lucas As Natalie mentioned, you have the option of getting the mortgage in your name or the LLC. Getting it in your name gets you Fannie/Freddie financing which is cheaper. If you do this and then later do a transfer to LLC, the bank can recall the loan. Some folks get away with it, and some don't. If you get the loan in LLC to start with then you are set, but you will have to either get a 5-7 yr balloon OR pay a higher rate for a 30 yr fixed residential portfolio loan.

You can also protect yourself with a good size umbrella insurance.

Good luck.