Purchased the property using HELOC, then BRRR, then Refi and LLC

[Timz Valenzuela]

Hi BP Family,

I would like to request for some advice. 

I have purchased my first REI using my primary home's HELOC (purchased a small duplex) and I plan to utilize the BRRR strategy then refinance.

I would like to form an LLC but I would like to know if it is better to refinance the property first under my name then transfer the property in an LLC via quitclaim deed after cash out refinance? From what I have read, banks would not loan to new LLC's without proof of income.

Furthermore, I have inquired for a lawyer's assistance with LLC formation and he quoted me $2000 to $2,500 for professional fees. I am just starting with my investment and I am quite unsure if it is wise to pay that amount of money for a simple LLC formation as I only have one property for now. Please advise. Thank you!

Best,

Timz

[Matt Crusinberry]

@Timz Valenzuela, You are moving in the right direction, and congrats on your investment! First off, you can refi into an LLC, but because it's new, the bank will look at you the same way as if you weren't using the LLC. That is, if you're able to meet the refi guidelines that the lender would require to refinance, your LLC will as well. This shouldn't be a problem for you.

In regards to your second question, I would not spend that kind of money for an attorney to create an LLC. That appears to be way over priced. I have created my own, had an attorney create several, and my CPA created some for me as well. I paid no where close to what they are asking. I would search out another attorney, or contact your CPA and have them give you prices. I hope this helps, and good luck!