How do you buy RE through LLC?

[Daniel Rozen]

Hello BiggerPockets,

i recently bought a property in FL and it was all done in my name (i.e. mortgage, deed etc). I rented it out and have positive Cash flow. Im looking at another property, but the question now is how do i protect myself and my property from legal perspective if its not part of LLC?

How do I finance newly opened LLC in a smart way? From legal and tax perspective. Not just dump cash into it i assume.

How do I purchase my next property via LLC?

What do banks need to see and are comfortable with as far as financial history of newly formed LLC?

If its a newly formed LLC, can it be backed by my personal finances/guarantor?

Basically how do you start RE investing using your LLC and not personal credit and name?

thanks much in advance.

Daniel

[Justin Hoggatt]

Good morning, @Daniel Rozen. From my experience, you can not get a home in an LLC if you are getting a mortgage on the home. If you are buying the house outright, you can buy it as an LLC. If you create an LLC, use it as the business that runs the properties. To get the homes into an LLC, you'll need to get the mortgage and close on the home, and then a point in a later time down the road (not immediately I've been told) and do a quit claim deed into the LLC of your choice.

Moving forward, it's the 5+ unit properties (Commercial real estate) that are purchased in an LLC and actually required by the lenders to do such. Those will be single entity formations meaning you'll have a separate LLC for each property but can be owned by a different LLC.

The best method for protection, and so many people will say the same, is proper insurance.  Make sure you're covered and have a good liability coverage and umbrella.  That will help the in the event you need it.