LLC

[Michelle S.]

My husband and I and another couple are looking to buy some commercial multifamily properties. We are wondering when is the time we should form our LLC: before signing the contract, at the closing, or even after the purchase? We don't know which state we are buying from yet. Thanks!

[Joel Owens]

Hi Michelle,

Australia works a lot differently than here. The best loans are above 2 million for various reasons.

It's actually more risky to start too small as you end up with local banks, recourse loans, the property doesn't have enough scale,  asset quality, short loan terms and amort. schedules, and more down than the typical 25%.

The funding is not an issue at all IF you have proper liquidity and net worth requirements.

The track record factor is typically smaller properties financed by local banks. For a larger CMBS lender it's all about the deal. A larger commercial PM company that has a track record will run the property and you just oversee them and their monthly reporting and phone calls to you.

I would strongly encourage you to talk and connect with some people on the phone about what kind of properties are out there and the debt available. In commercial it's all about the debt you can get on a property and terms.

There are deals but you have to be extremely focused. My commercial clients are buying a bunch of property. If you are trying to figure out the process and being a flaky buyer without direction the listing brokers and the sellers if selling directly will not waste time with you.

First time investors etc. new to the process or this country need a broker helping them through the process. It makes a difference if the listing broker receives an offer directly from a buyer that has no experience versus an offer from a commercial listing broker with a track record and the listing broker knows the buyer broker will be there making sure it closes and that the buyer is educated on what to do ahead of time.

Sellers do not want to waste time with flaky and or uninformed buyers. I hope I am helping. I am out there everyday doing commercial RE for a living and also an investor myself so I know how the markets are moving and what sellers expect in an offer with terms and pricing to accept your offer over other buyers.