Forming a LLC to hold a free & clear house. Any thoughts?

[Account Closed]

I'm new to the world for real estate investing. 

I'm planning to make an all-cash offer for a SFR in a week or so.

I'm considering making the purchase with a LLC versus purchasing it in my name.

By the way, I'm using a BRRRR strategy. Do you see any complications with obtaining financing from a future re-finance or from purchasing future property where I can use the free and clear home as collateral?

What do you think?

[Kevin Sobilo]

I do exactly what you are planning. I buy distressed properties (non functional) in cash within an LLC. I rehab them into above average rentals and then refinance.

You should be fine to do this, but when you look for financing you will likely need to go to a local/regional bank or credit union not a big national bank. Getting a conforming Fannie Mae/Freddie Mac type loan for an LLC may still be possible, but its a pain.

I have moved to using 15 year adjustable rate loans with a 75-80% LTV. My rate is locked for 3 years and then adjusts at about 1% over prime. The loan can be in your LLC's name, but because your LLC won't have a credit profile or history to speak of, you will still have to personally guarantee the loan.

If you execute a solid plan for your project you should be able to refi out at least what you invested, likely somewhat more. So, then you can repeat the process over and over.