Newbie Buy and Hold Investor - Chicago

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Newbie Buy and Hold Investor - Chicago

Brya Freeland
Rental Property Investor · Alexandria, VA · Member since 2019 · 60 posts · 10 votes

Hello BP Community, I need some perspective on the following topic.

As a new investor specifically targeting buy and hold properties in the Chicago area, I want to know if setting up an entity ie. LLC, Illinois Land Trust, etc. is necessary starting out? I understand that once I have a number of properties under my belt, then it may be more manageable to create a business entity to house these assets. However, does anybody have any Pros v Cons in going with an LLC, a Land Trust, or investing as an individual? FYI - I only recently discovered the land trust option after talking to a local attorney in the Chicago area.


Thanks

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Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
6y
Originally posted by @Brya Freeland:

Hello BP Community, I need some perspective on the following topic.

As a new investor specifically targeting buy and hold properties in the Chicago area, I want to know if setting up an entity ie. LLC, Illinois Land Trust, etc. is necessary starting out? I understand that once I have a number of properties under my belt, then it may be more manageable to create a business entity to house these assets. However, does anybody have any Pros v Cons in going with an LLC, a Land Trust, or investing as an individual? FYI - I only recently discovered the land trust option after talking to a local attorney in the Chicago area.


Thanks

We hold our portfolio in land trusts for the following reasons:

  1. Privacy- We close inside of Land Trusts for privacy. The Land Trust in on the public record, not our LLCs or us. 
  2. Transfer of Assets- We use to purchase a lot of SFR from Fannie/Freddie. Many of which had deed restrictions that did not allow resale of the property within 90 days of closing. Our solution to comply with the deed restriction if we had a sale within the 90 day was to transfer the asset inside of the Trust. The Trust still owned the asset but we were no longer beneficiaries of the Trust
  3. Inheritance- When that day comes our children are the beneficiaries inside the Trust. Uncle Sam doesn't get a cut. 
312-681-7487
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  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Brya Freeland:

    Hello BP Community, I need some perspective on the following topic.

    As a new investor specifically targeting buy and hold properties in the Chicago area, I want to know if setting up an entity ie. LLC, Illinois Land Trust, etc. is necessary starting out? I understand that once I have a number of properties under my belt, then it may be more manageable to create a business entity to house these assets. However, does anybody have any Pros v Cons in going with an LLC, a Land Trust, or investing as an individual? FYI - I only recently discovered the land trust option after talking to a local attorney in the Chicago area.


    Thanks

    We hold our portfolio in land trusts for the following reasons:

    1. Privacy- We close inside of Land Trusts for privacy. The Land Trust in on the public record, not our LLCs or us. 
    2. Transfer of Assets- We use to purchase a lot of SFR from Fannie/Freddie. Many of which had deed restrictions that did not allow resale of the property within 90 days of closing. Our solution to comply with the deed restriction if we had a sale within the 90 day was to transfer the asset inside of the Trust. The Trust still owned the asset but we were no longer beneficiaries of the Trust
    3. Inheritance- When that day comes our children are the beneficiaries inside the Trust. Uncle Sam doesn't get a cut. 
    312-681-7487
    1Reply
  • Vincent IncoperoPro Member
    Attorney · Elmhurst, IL · Member since 2016 · 255 posts · 161 votes
    6y

    @Brya Freeland - Legal advice should come from the attorney that you are working with and be should be confirmed by your accountant so that meshes with what they are trying to do. 

    [email protected]630-299-7600
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  • Brya Freeland
    OP
    Rental Property Investor · Alexandria, VA · Member since 2019 · 60 posts · 10 votes
    6y

    @Crystal Smith Thanks Crystal for your insight, much appreciated

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  • Brya Freeland
    OP
    Rental Property Investor · Alexandria, VA · Member since 2019 · 60 posts · 10 votes
    6y

    @Vincent Incopero I understand that, just wanted to get additional point of views on the general topic.

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  • Calvin OzanickBusiness Member
    Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
    6y

    I do not know all of the legal, but from a lending standpoint, getting a mortgage in your personal name will give you the best rates and loan terms. This is pretty common to keep your first few purchases in your personal name in order to take advantage of high quality loans early on. 

    Wisconsin Property Managers4.7412 Reviews
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  • Brya Freeland
    OP
    Rental Property Investor · Alexandria, VA · Member since 2019 · 60 posts · 10 votes
    6y

    @Calvin Ozanick Good point Calvin, didn’t even think about the lending side. Thank you

    0Reply
  • George DespotopoulosBusiness Member
    Lender · New York, NY · Member since 2016 · 936 posts · 287 votes
    6y

    @Brya Freeland if you're going conventional then yes invest through your personal name. But, if you're looking to fix and flip or rehab to hold, in order to get a hard money or bridge loan you'll most likely need to form an entity -- hard money/bridge lenders usually require it. Land trusts may preclude you from financing with a majority of investment property lenders -- I can't speak for traditional/conventional sources as I don't have experience there. 

    MoFin Lending4.9152 Reviews
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