Real Estate Investor · Greensboro, NC · Member since 2014 · 2 posts · 0 votes
I have a family loan on a single family home; owe 90k, home is worth 110k. I would like to be able to pull a chunk of money as a downpayment to begin investing in multi-family. My basic plan is to sell the home, and ask to have the 90k loaned again as the downpayment on an owner financed multi-family property. I also would like to form an LLC at that time for the multi-family property as the current property is simply in my name. So a few questions here: Is this kosher in general? Are there tax implications to look at on my side or the family side? Is there any difficulty in the conversion of that loan into a proper business format? Is there a different and better way to do this? Thank you for any and all advice.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Geeez, those questions....
You have a certain type of loan, owner occupied residential, as Wayne mentioned, there is no converting that loan it must be paid off.
You qualified for that loan under different requirements as a residence, multi family is a commercial loan with different requirements, one being more as a down payment.
No, they don't loan money for a down payment to qualify to obtain a commercial loan.
Apples and oranges.
Drop back and punt, you don't get the ball back until you get some basic real estate knowledge and know too, trying to buy a commercial property also requires management and experience, cash reserves as well as your money in the deal. Don't put a sign in the yard yet! Good luck :)
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
There won't be any "converting" the loan to a new property, or to an LLC. You're not dealing much cash left over here, but if you sell this property the loan will have to be paid off, and you'll have to qualify for a new loan on another property.
Investor · Maui, HI · Member since 2012 · 232 posts · 96 votes
11y
So you regret investing the 90k loaned from family in the current property and wish you would have invested else where, like the multi family you mentioned? How is your current rentals cash flow like? Can you get conventional financing cash out refi on it and still have positive cash flow? One way to pull cash out without having To sell a good property.
If you sell, you will have to pay capital gains on any profit, depending on how long you have owned the rental.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Geeez, those questions....
You have a certain type of loan, owner occupied residential, as Wayne mentioned, there is no converting that loan it must be paid off.
You qualified for that loan under different requirements as a residence, multi family is a commercial loan with different requirements, one being more as a down payment.
No, they don't loan money for a down payment to qualify to obtain a commercial loan.
Apples and oranges.
Drop back and punt, you don't get the ball back until you get some basic real estate knowledge and know too, trying to buy a commercial property also requires management and experience, cash reserves as well as your money in the deal. Don't put a sign in the yard yet! Good luck :)