Real Estate Agent · Davison, MI · Member since 2018 · 113 posts · 34 votes
I’ve been doing research on seller financing and I just want to see if anyone has additional feedback for my first creative deal using the seller as the bank.
I just came to terms with a former partner to buy a duplex from him. Because I'm in the middle of refinancing my BRRRR property I can't go the traditional route.
I'm going to give him $30k down to hold it and then finance later in April. Can I put my LLC as the buyer of this property? Will it affect my ability to finance it later? Anything else I might not be thinking of that I should be aware of?
@Steve Vaughan thanks man! I’ve heard similar advice. Any advice on protecting yourself from a legal standpoint?
I carry max allowable liability coverage (about $30/no for $300-500k), act above board and have my PM s-corp as the landlord.
If the insurance co's are willing to offer me $300,000 in liability protection for $30-60 (duplex) per month, who am I to fear the boogeyman?
I've owned dozens of houses for 16 years with no problems. Just don't over-withhold security deposits. Tie goes to the tenant. Many on here have gone through major indigestion for piddly $200 or whatever deposit disputes.
I’ve been doing research on seller financing and I just want to see if anyone has additional feedback for my first creative deal using the seller as the bank.
I just came to terms with a former partner to buy a duplex from him. Because I'm in the middle of refinancing my BRRRR property I can't go the traditional route.
I'm going to give him $30k down to hold it and then finance later in April. Can I put my LLC as the buyer of this property? Will it affect my ability to finance it later? Anything else I might not be thinking of that I should be aware of?
Thanks in advance,
Bradley
Residential property in an LLC is not finance-friendly at all. You will have to put it into your own name or be subjected to commercial terms.
I paid off all of my commercial loans because of those crummy terms, bothering me at this time every year for my taxes and PFS, calls, balloons, adjustable rates. And those were on commercial properties. No thanks.
@Steve Vaughan thanks man! I’ve heard similar advice. Any advice on protecting yourself from a legal standpoint?
I carry max allowable liability coverage (about $30/no for $300-500k), act above board and have my PM s-corp as the landlord.
If the insurance co's are willing to offer me $300,000 in liability protection for $30-60 (duplex) per month, who am I to fear the boogeyman?
I've owned dozens of houses for 16 years with no problems. Just don't over-withhold security deposits. Tie goes to the tenant. Many on here have gone through major indigestion for piddly $200 or whatever deposit disputes.
I have a similar setup on a 4-plex and haven’t had any problems. Insurance is very reasonable here too I just don’t wanna get caught with my pants down lol
Excuse my ignorance but PM s-Corp fo what? If the house is in your personal name how can you run it through an S-Corp?
I have a similar setup on a 4-plex and haven’t had any problems. Insurance is very reasonable here too I just don’t wanna get caught with my pants down lol
Excuse my ignorance but PM s-Corp fo what? If the house is in your personal name how can you run it through an S-Corp?
I hear you. I definitely do have LLCs, but not on resi property with debt. Only ones I own free and clear and plan to keep that way or commercial property.
I have the mgt co so nobody makes rent out to me and I am not on the leases, except as an agent of the corp.
I also have a higher authority when the answer is no. Can't say no (and not be the bad guy) when they're paying you personally. Lots of other ease of tax records reasons, but those are the big 2.
I've never had a tenant make a check out to me directly. HUD, CAC, nobody. What's that like? Ok. Wierd? Do you have a separate bank acct just for rentals?
@Steve Vaughan thanks for the advice I think I will do it similarly!
You're welcome, Bradley. I ran this by my knowledgeable attorney first and recommend you do as well.
Funny story. Had a tenant served for late rent last wek. They had left. A new person my mgr Mike had never seen before answered the door. Mike gave the guy 30 mins to get out. 30 mins later Mike shows up with a neighbor and throws the guy out. The guy says Mike stole his wallet as he's being chased down the block. Says he's going to sue or something.
Thing is, this guy (or my tenants for that matter) don't know who owns what or nothing. They make rent out to a corp. I am just hired help. Anyway, may provide a little 'asset protection' in that they dont know who to be mad at.
Also talk to a tax pro. I only track mileage once, not for each property. All 1099s in and out go through 1 place. I can pay the corp a mgt fee and for servicing the properties if I want to. Some years it's good, as I can fund my retirement plan if I need deductions and stuff that year. My mgt agreements let me charge up to 8% of rents + hourly rates for different repairs and maint I do, but not required. Play what-if at EOY. Pretty cool.