Buy under personal or LLC for house hack?

Question

When buying a small multi family for house hacking, should I buy under my LLC or buy it as I would any other primary residence? Thanks in advance!

Russell Brazil · Answer

For a primary residence, the tax benefits are far greater if you personally own the property.

Joe Splitrock · Answer

Primary residence is typically better off with a personal loan due to lower interest rates and longer term fixed rate financing. If you want a 30 year traditional/conventional mortgage, they do not lend to LLC. You can generally transfer to an LLC after sale, but it is probably pointless. If you live in the property, self manage and have the loan in your personal name, transferring the property to an LLC will do very little. An LLC is meant to separate the owner for liability purposes. When you live in a property, you can't separate yourself from it. Any good attorney will pierce the corporate veil. The danger is you can put it in an LLC and THINK you are protected, when you are really not. Have good liability insurance and be extra responsive to issues at the property. That is really more effective than an LLC in this particular situation.

Tammy Mason · Answer

Yeah, read up on what LLC's do and S-corps and such. Ask advice, learn that stuff. I use several LLC's. I just think its cleaner on the books to have a company and get a small salary and such, and you better believe my company pays for a LOT of stuff I would have to if I had a 'real' job.

On the lending, the "house hacking" thing (which is all over the place now and until the posts here recently I've never heard it called that) works great with Fannie Mae money on 30yr mortgage loans at the crazy low rates we have now. If you form an LLC and go for a loan, first off, the LLC has not income or assets so will have trouble qualifying, second, you will be in a commercial loan which will raise the rate a point or two and have a shorter amortization and probably a balloon payment.

This may be a little over complicated, but if it were me, I'd do the loan in your name, put the house in a trust right after you close and make an LLC the beneficial interest of the trust (basically just run all the expenses and income out of the LLC because a piece of paper in your filing cabinet says you can). Get some help/advice on that before you do it, but that's what I'd do. I dont like having anything in my personal name.

Your LLC offers some lawsuit protection, but its not an end all. The anonymity of what you own is more important IMO. Lawyers dont like to work for free and if they see a lot of work to pierce a corporate veil with very little payoff they'll go away. Tax wise its about the same, but I like corporate expenses vs. write offs and my company is pretty crazy generous with not firing me when I buy dumb things on the corporate check card...

Basit Siddiqi · Answer

@Joshua SouthardAn LLC is normally used to hold your business assets. A house-hack is a partial personal property. You may not get the legal protection you are looking for.Consult with an attorney.

Waleep Alvi · Answer

If you are looking to obtain residential financing for this home you will need to buy it in your personal name.

Traditional residential financing the property needs to be in your personal name.

Banks will not do a residential mortgage for a 1-4 unit property

Buy under personal or LLC for house hack?

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