Moving Personal Property to LLC

[Joseph Humphreys]

A family member has bad credit and around 380k of debt he needs to pay off. However he only owes 150k on his mortgage and the house is worth anywhere between 750k-850k. Is it possible to start a LLC with this family member and transfer this property into the LLC and then use my credit and such to refinance the house and pay off the debt he needs and I take some of the refinance money left over and use it to reinvest in real estate?

[Aaron W.]

@Joseph Humphreys I'm not a lender but am currently running through a similar situation with a seller. How bad is the credit of your family member? Did they have any bankruptcies? If the family member is unable to qualify for a loan, then the partnership (on paper) has to show the family member owning less than 20% of the LLC. Anything more and the lender will require them to provide their financials for consideration on the loan.

There may be other ways around it with different lenders and with your family member owning an equal part of the LLC. In our situation, this was the way we are approaching the partnership with the seller.

Best of luck!