Purchasing the company (LLC or Corporation) that holds the property

[Jorge Vazquez]

I've had great success this year by purchasing the company (LLC or Corporation) that holds the property rather than buying the property directly. This strategy has allowed me to save on closing costs, secure favorable financing terms, and refinance almost immediately, all while minimizing my down payment. It's been a game-changer in my investment approach, and I've completed two deals this way already. I highly recommend it to those of you who haven't tried it yet. I'd love to hear from other investors who have used this method. What's your experience like? Are there any challenges you've encountered?

Looking forward to your feedback!

[Stetson Oates]

Hello, I'm glad you have had success doing this!!! I would caution that any outstanding litigation or taxes would follow the LLC if something went unreported or paid. If someone had an incident on the LLCs property in the past and decides to sue, you may have an issue. Same for any unpaid taxes in the LLCs past. Do your due diligence when purchasing an LLC.

[Jorge Vazquez]

The real savings and benefits come when you're purchasing an existing LLC or corporation that already holds the property, rather than forming a new entity and buying the property directly. By buying the company, you can avoid certain costs like mortgage reapplication fees, title insurance renewals, and some legal fees. Plus, the seasoning of the company can make it easier to secure better credit terms or refinance quickly since lenders often view established entities more favorably.

One of the biggest advantages, though, is the flexibility in negotiating the down payment. Instead of the typical 20-25% for DSCR loans, you and the seller can dictate the terms, even incorporating an equity-sharing agreement for added flexibility. This allows you to put down less upfront, freeing up cash flow to improve the property. Then, with those improvements, you can refinance and potentially cash out all your equity. It's a strategy that not only saves money but also maximizes the property's value and your overall returns. Hope this clears things up!

[Jorge Vazquez]

Quote from @Stetson Oates:

Hello, I'm glad you have had success doing this!!! I would caution that any outstanding litigation or taxes would follow the LLC if something went unreported or paid. If someone had an incident on the LLCs property in the past and decides to sue, you may have an issue. Same for any unpaid taxes in the LLCs past. Do your due diligence when purchasing an LLC.

Hey, thanks for the feedback—I really appreciate it! I’ve been in the real estate game for over 20 years and have found that with the right due diligence, buying the company holding the property can be a solid move. I get the concerns about liability and title insurance, but I’ve had success by thoroughly vetting the company’s history and securing protections like hold harmless agreements. Plus, the immediate refinance opportunities and savings on other closing costs have been real game-changers for me. Of course, this strategy isn't one-size-fits-all, and I'm always open to learning more from others’ experiences. Anyone else tried this approach? Would love to hear how it’s worked for you!