Any NC Bank that will do mortgage under an LLC w/ personal grnty?

Question

Hi

I am hoping to purchase my first rental property and have already set up an LLC for all of the tax benefits that it brings.

I was hoping to get a mortgage to own the property in Charlotte NC under my LLC's name with a personal guarantee.  After reading some on this site and others it seems only a few local banks might do this.  Is anyone aware of a local Charlotte or North Carolina bank that will originate a small $40k loan under an LLC with a personal guarantee?

If not I've heard about transferring the deed to the LLC after it has "seasoned" but this can also cause the lender to call the loan, which of course would not be great.  Does anyone have experience doing this in Charlotte NC and if so what was the result?

If I'm not able to do either of these, how does everyone use their LLC for business purposes when owning real estate?

Thanks for all of your help in advance!

Josh

Joshua Schoer · Answer

Thanks for the clarification Steve, no apologies needed, hard to read intent or tone on the Internet =)

Completely agree about the confusing title, you're right, discovered the lack of advantage of LLC for rental mid thread in my last post.  I have read it might be possible to do a complicated system of owning the property and then leasing it to a trust you own in some form in order to benefit, but it seemed sketchy at best (tax avoidance strategy).

I do intend to use the s corp election for Flipping as you suggested, every little bit helps.

Thanks again for everyone's advice and information.

Joshua Schoer · Answer

Hi all,

Sorry I haven't replied yet, thank you all for your replies.  I actually found Charlie Reep by looking on the Internet before reading Josh's post above, but he is great.  I talked with him for about 30 minutes and he will be the first person I reach out to in the future.

On a related note while talking with Charlie I learned that rental income is taxed the same whether or not the property is owned by an LLC, so there are benefits from a liability standpoint but not really a taxation standpoint in an LLC.  Someone please correct me if that is wrong.

An LLC might be beneficial in a flip though, so I'm going to keep mine for that purpose.

Thanks Curtis and Luke for the other contacts, I will also reach out to them.

Thanks

Josh

Curtis Waters · Answer

BB&T Commercial will do this loan, as well as Lima One Capital's Rental30 program.

Steve Vaughan · Answer

@Joshua Schoer

Appreciate the comments.  I apologize for sounding like I was talking down to you.  It wasn't my intent.   I have never put a smackdown on someone and voted for their post at the same time before :)

You've obviously received and shared new information since your title post.  The vote was for the clarification that you intend to flip.  Changes the whole discussion.

I was trying to make a point for others. If they only read your title post, they too may think an LLC has magic tax beans.

The idea that tax benefits exist simply by having an LLC is what I was emphasizing.  They are work.

If stated in your original that you were seeking SE tax benefits for flipping, I would have completely understood.   Yes, I have read flippers can experience SE tax benefits be electing to be taxed as an s-corp.

Always seek professional tax advice before acting.  Be clear what type of asset you intend to buy (residential or commercial) and your exit intent (flip/hold) for correct guidance.

Peace and apologies to you!

Joshua Schoer · Answer

Hi Steve,

Again I'm new to this, not trying to pretend otherwise, so not sure your superior attitude is all that helpful.Anyway, the income tax advantage I was referring to (again, not sure that this is the case, I'm still going to consult a CPA) is related to social security tax savings spelled out on the Dealmakerlibrary website that I can't link to but google can find for you called Which Entity is Best for Flipping Properties?

by Alex Everest

Again, if that's not correct I'd always appreciate knowledge, maybe without the attitude?Thanks

Steve Vaughan · Answer

I have held commercial assets in LLCs for 11 years.

Please share what the 'tax benefits' of an LLC are.

Is it the benefit of having to do quarterly filings with the state?

Calculation and distribution of the k-1s that flow to your 1040 anyway?  LOL

You didn't share what type of investment property you will be purchasing.

Little residential houses do not blend well with lenders or insurers.

Horeshoes should be played in a park.  Close does not count!

Michael Brittner · Answer

Joshua, please feel free to share your results with any of these banks.  I plan on doing exactly what you are doing here in Charlotte, NC.

Josh Brewster · Answer

Josh,

Give Carolina Trust Bank in Lincolnton a call, they are a local bank with 8 branches I think and ask to speak to Charlie Reep, he may be able to help you. We have worked with them on multiple loans for flips and and rentals. They will look at your personal financial statements to secure the loan, but all our properties are under our LLC. Hope that helps, let me know.

Josh

Any NC Bank that will do mortgage under an LLC w/ personal grnty?

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