Transferring Ownership to a Legal Entity Post Purchase

[Robert Hursey]

Yes, I know I need to speak to an attorney and an accountant. I am just looking for some guidance. This property just came our way and we are trying to take action.

My brother and I are about to put an offer on a property and my broker asked if we want to put it in my name, both names, or in an LLC. We plan on forming an LLC, FLP, or C-Corp after the purchase, but did not think about WHO we want to make the purchase. Will doing this after the fact come back to bite us in the butt? The plan right now is I get the loan in my name and he is a money partner. We have not even decided if we are going to go the route of a legal partnership. We may do a FLP, LLC, or a C-Corp. In IL, legal entities are more expensive to set up and renew than many other states and we want to make sure we are doing this right to not have the property traceable to either of our names. We will also be transferring the property to an IL Land Trust and have ample insurance as well.

[Andrew Postell]

@Robert Hursey from the lending perspective if you need a loan to buy your next property you can get a loan in a business entity name with a "portfolio" loan.  A portfolio loan comes from an individual bank's own money.  So the bank can call the shots on how they want to structure the loan and who's allowed to be on title, etc.  Most portfolio loans will allow you to buy in the business entity name.  You may have to personally guarantee the mortgage payments but your purchase contract, deed, etc. can all be in the business name.  Portfolio loans do vary widely - from higher interest rates to shorter amortization schedules - so make sure you know all the details BEFORE putting in a contract on a home.  Interview different banks to find out each bank's tolerances and loan differences.  The conventional loan products are the ones that require an individual person to buy the home, be on the mortgage, deed, title, etc.  Most investors do use a conventional loan to buy the property and then switch the deed to the business entity name after closing.  In either case you would have to have to business setup before you start buying the property.  Hope this helps.  Thanks!