All Forum Posts by: Ed Goble

Thanks to all. This all may be moot, because it looks like my HELOC that I was applying for that was going to be used for the down payments on my investments has probably been denied because of technicalities, not even my credit worthiness or anything, just some technicalities. This will set me back many months for sure.

Thanks for all your help.  I may have to continue this in a number of months when I can try again.

Thank you all.  This has given me a lot to think about before I go to see my attorneys.  Thanks.

thank you

Can an LLC get a credit line like a residential HELOC based on home equity? I would like to be able eventually to pay down the regular mortgages but be able to access the equity in the properties owned by the LLC perhaps for down payments on other houses.

Yes, I plan to talk to some real estate lawyers but have to get an appointment set up tomorrow. Yes, what you say makes perfect sense. And this has also bothered me about payment of mortgages, obviously probably a question for a lawyer: Can the LLC directly pay the mortgage if it is in my name? If it cannot, and I withdraw the money to pay it, then is it considered income and taxed even though it was not really income to me, but a business expense?

Furthermore, I am already having problems knowing what to do about using my HELOC on my primary residence for a down payment on properties, in terms of how to pay off what I am going to borrow from the HELOC (i.e. is it me or the LLC that pays off the amount I borrowed from the HELOC), and how to avoid comingling in these cases. Because how do I distinguish for tax purposes what part of the HELOC was used by the business, and what was used for my personal life and needs? It is clear to me that money has to be deposited in the LLC bank account in order to pay for things associated with the LLC. But if that money is coming from personal funds (and a HELOC in my name on my primary residence is basically my personal funds in a sense), doesn't this mean that I am lending money to a different entity, even though it is still kind of.... me that I'm lending to? But in the Universe of taxes, the LLC is different from me (my personal self) I think, or ought to be. Yet, to pay off that HELOC, why should the money that comes out of the business to pay that off that HELOC be taxed as if it is income? That doesn't seem just to me. It should be considered the payment of debt from one entity to another in the tax universe. In essence, I am lending my LLC money from my personal HELOC, and it should be treated as a debt payment to me personally from the LLC to pay off the HELOC, and not taxed as personal income (even though I am not personally charging my LLC interest on that debt, but it should still be treated as an interest free loan of a sort for accounting/tax purposes).

Yes, I have lawyers and a CPA that need to answer these questions.  I realize this.  I'm just thinking outloud about yet another issue to be dealt with.

@David M., it would probably be ideal for the title to be under the name of the LLC, yes, but if the terms for the mortgages are dramatically different, then it may make more sense to go to residential mortgages at first. For example, since my FICO score is so high, there is no reason that I cannot get a really good interest rate on a residential mortgage. Already, some that are replying to me privately are telling me that 30 year fixed commercial terms are available.. Are the 30 year fixed commercial mortgages typically much higher interest? if so, that may sway me toward residential mortgages for my first properties, and go commercial mortgages later.

Another issue however is that if I get residental mortgages, I still will want to try to quit-claim-deed them to my LLC after closing, (or find someone that will let me put the LLC name on the residential mortgage right when closing, which may not be possible).  However, the advice I am hearing from most people is that quit-claim-deeding after closing to the LLC is very common, and nobody seems to ever had the mortgage company come back and demand payment because of the due on sale/transfer clause.  So, perhaps I could live with the mortgage being directly in my name, if my identity isn't really protected all that much anyway.

@Jerry W., I think this perspective is invaluable.  You are absolutely right, I think, after all of my interactions and personal meditations on this. My intent is certainly to learn the rules to do things right so that the liability protection that is available is effective.

I think now, from this point of view, since I already have much of my legal structure in place, the only difference between commercial, private and residential loans that I will choose is the ones that give me the best terms at the time.  For example, I'm told that I can only have 9 residential mortgages in my name, and after that I need to find other types of financing.  Thank you

Thank you @Tom S.

Hi. I have really good credit (personally, an 800+ credit score) and my record for paying my bills is stellar. The only potential issue is that I am a newbie and am looking to buy the first property. I am hoping for suggestions on commercial mortgage providers that would do a 30 year fixed, and that would have the mortgage in the name of my LLC, and not in my name. If not a 30 year fixed, then as favorable terms as possible. My main concern is to find something that won't force me to put the property in my name when I want to have it under the umbrella of an LLC.

The down payment is not a problem because I will be using my HELOC on my residence for it.

Private money is a good option if the terms are sane and decent.  I realize that my lack of experience may be an issue in either case (a bank or private money for the source of the mortgage), but I do have mentors and lawyers to make sure I do this right, and I also will be using a property management company with a lot of experience.  So I am very certain that this will work with the right arrangement.

Please private-message me if you have suggestions.

Thanks

@Steve Morris, thank you, I suspect that you are correct as well that the lender wants to have recourse if things go south.

I think though, after all, that I cannot afford to not talk to a lawyer and just do the retainer in the first place, even though it will be expensive.

@Joe Splitrock, I do have a trust (a regular one) already that owns the Wyo LLC. Are you suggesting another trust or perhaps another specialized type of trust though to directly own the properties that I was thinking of putting under the LLC?