All Forum Posts by: Devon Fritz

Charlie,

Not experienced with partnerships, but am a little with LLCs. As always, definitely get an attorney as they are pretty good at legal things....

1. Yes, most definitely. An LLC has an operating agreement by which you lay out the agreements of the business members. You can explicitly handle ALL situations here from % ownership to capital investment to managing partner, etc...

2. My understanding is an LLC is a good entity for small real estate investors (sole ownership or otherwise). Most of the reasons are for tax purposes and overhead of management.

3. This is more a financing/lender question. There is a lot of info out there on mortgages with LLC entities. The general issue arises with the due on sale clause on mortgages. Basically a lender will not mortgage a property under an LLC for competitive rates. They will do it, but since it is higher risk the rates are higher (there is also a factor of how long the LLC is in business). So if you mortgage personally and then try to put it in the LLC the bank could call the due on sale and require the mortgage to be paid in full. Past getting a business line of credit I am not sure how you would go about legally holding a personal mortgage between the two of you.

4. Not sure

5. That is something you specify in operating agreement. Be explicit.

The best piece of advice I give you is talk to a lawyer. the amount of value you get from 4 hours of consultation is worth it. Even if they just give you a solid op agreement since that seems like it would solve a lot of your questions. Think of it as part of the cost to buy a property.

Henry,

I was at the BP meetup this last Monday and it was a good event with a variety of people there. You should stop by the next one!.

@Matt Pritchard

I see you are in Kansas. Do you have RE in Denver? How is the Kansas market and what investing do you do there?

Yea, that has been the general consensus I have heard thus far. How about REIA meetups? I am not so confident about the ones I found online...

Hi all,

Just joined BP a week or so ago after getting hooked to the podcast. I am currently invested in Kansas RE and am interested in learning the Denver market. Really looking to grow my RE knowledge and network in the area.

See ya'll around the site or at the BP meetups!

Hi all,

Appreciate the quick responses. I have quit claimed the deeds to the LLC, as @Preston Schmidt mentioned, and was curious what people do with the personal mortgages they used to purchase the properties. Like @Andy D. said this is desired for asset protection

After researching around, it seems like there is no way to totally get around some sort of personal guarantee on the liabilities to get the lower interest rates. It also seems to be an ad hoc answer in that it depends on the lender/investor relationship.

As far as clarification on my second question, I really was asking what types of agreements people have with their banks for loans when their property is QC'd to their LLC. I need to do some of my own independent research as I did see some threads on the subject. I will post back when I find some answers for that to close out the thread.

Thanks again guys.

Hi all,

I currently hold personal mortgages for properties that are deeded to a sole ownership LLC. Ideally I would have the mortgages held by the LLC, but as most of you know, that would be a commercial loan and would result in higher interest rates. The question is 2-fold:

1. Besides the personal liability downside, are there any disadvantages to having a personal loan for LLC held REIs?

2. Does anyone have a HELOC or even secured commercial loans with their banks under their LLC?