When buying your first property, should I use a business entity?

[Rory Shaffer]

Hello my name is Rory Shaffer, I’m very green to this industry but I feel like I’ve been bit by that bug and I’m always looking at land/property and playing that what if game in my mind. I’ve been doing a lot of homework on investing and become a landlord via house hacking and before I sit down to the table with the bank should I set up a corporate identity for protection?

Because I’m just starting out I want to make sure I do it properly. I value any feedback and look forward to working hard to achieving my goals.

Again thank you

Rory Shaffer

[Michael Noto]

@Rory Shaffer First off, welcome to the forums. Always great seeing others from CT active on here.

There are benefits and drawbacks to buying the property in a LLC or entity. Most first time buyers buy in their personal names so they can take advantage of the low money down and/or low rates that come along with financing with a FHA/fannie/freddie backed loan.

The lenders that offer these loans will not permit you to purchase in a LLC. There is always the option to quit claim the property to a LLC after close which some people do. You will want to look more into that as an option to see if you are comfortable with it.

If you decide to purchase in a LLC you can expect higher fees, higher rates, etc.. Typically though the loans require less red tape to get to the closing table in the form of underwriting.