Advice on best route for financing investment property

[Bryan Lowman]

A bit of background first. A tax auction has come up on a property with great potential for profit. The property has unique (to say the least) challenges that require an equally unique skill set to solve. Some colleagues and I are positioned to solve these challenges and have decided to purchase the property at auction, correct the issues and resell the property. Our plan is to form an LLC to protect all our individual interests.

Our concern moving forward is financing. Winning the auction will allow us only 45 days to obtain the financing. Our concern with traditional financing is that we will be a brand new company with only our individual assets, the time required to actually get the funds and the high rates involved with it being a company and not an individual. The best option we can see is a hard money loan. The question is which state to get it through. We all live in different states and the property in another.

Any advice would be greatly appreciated. We're all new to real estate investing and a guiding hand would go a long way.

[Jeff Rabinowitz]

@Bryan Lowman, welcome to BP. The policies of hard money lenders and the types of projects they fund vary significantly as do the lending laws in different States. The lender will be most concerned with the State that the property is in. It is that State's laws that they will have to comply with if they should have to foreclose. That doesn't mean the lender has to have a physical presence in that State. Start contacting lenders and ask them your question. You may want to hold off on forming your LLC until you get some feedback. The lender may prefer your LLC be in the State where the property is located also. Once you have gathered some background info it will be wise to contact an attorney. Since this appears to be a multi person LLC you will want legal advice for the LLC'c operating agreement. That may be the most important document for your venture. Best wishes.