Need Some Strong Advice!!!! Making Moves

[Leroy Fellis]

Good Evening BP people,

I need some advice. In a nutshell mother, two brother and I have decided to create our own REI company. The partnership agreement has been drafted. We all will own 25% of the company. When we find a deal(First few) well will put up 25% of the capital needed to purchase the property. As Cash flow flows, we will Divide(after a certain amount of months) 70% of the cash flow by 4 to go to each individual. The Main question I have is financing the Deals. We plan on House hacking our first property. My mother will live in a Triplex or Quad(Praying Quad) for the first property. We are looking at using possibly Conventional, Conventional 97 or FHA. What I don't know is, would the back allow all of us to sign on the property or would we just use the LLC to purchase? Can an LLC be used to purchase a Property with FHA,Conventional, Conventional 97? Will the back use the LLC for approval of loan or my mother or all of us? I know there are many questions in this post, I just really do not know how it would work because all of use are even partners in the company.

Thanks you all in advance for your meaningful comments.

[Leroy Fellis]

@Michael Thach Thank you for the advice! Excuse my ignorance, but he sentence,"

The strongest income should go on the loan but I would suggest that this person also get a bigger cut because his DTI will be effected if the property is hugely positive cash flowing. Only 75% is counted as income in an investment property

Can you elaborate? If you can use an example with numbers it will help me understand the most. I really appreciate the information on the Newly formed LLC. My mother will be living in a Unit and paying the appropriate rent. This will guarantee the cash flow Flows into the business. If we all have our names on the Property how will that impact he DTI? Just for kicks, How long will it take/what is a Target income a LLC should make before one is able to use the LLC to purchase Property?

@Rachel H. Thanks for the advice! I have a follow up question. I have heard around Video and other sources that when you buy a property in your own name and transfer to an LLC it can force a DUE ON SALE clause (May have said that wrong). Is this true. I want to have an Idea of possible obstacles that can come our way.