All Forum Posts by: Michael Laurencelle

Michael - When you say "loan" - what are you meaning? A loan from yourself to your newly established LLC? I would ask your CPA for the benefits of providing a loan to an LLC. If you're a single member LLC I'm not sure it makes much difference as it will likely flow through your own tax return anyway as a disregarded entity. However, if you're setting up the LLC to file as a business with a separate tax return there might be some advantages to a loan. As for your question on the hard money lenders - I don't think it matters how you source the equity for a deal, but it's more important how much equity/downpayment you can put down on a deal - i.e. 10%, 20%, 30%, etc... I don't think it matters to them if the money can from your LLC as cash or cash from a loan that you provided to your own LLC. Good Luck!

Yes, a loan from myself to my newly established business. And yes, It is a partnership LLC to have it's own tax return, 1065, K1, etc.

Thank you very much for the feedback - much appreciated!

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When funding my new LLC for flipping, should I use capital contributions or loans? I like the idea of a mix - with a smaller capital contribution being my buy-in and then a second larger amount for funding the first deal being a loan that will get paid back to me over time - over say, 5 years. I also feel like there are potential tax benefits to a loan instead of contribution/distribution. I would much rather pay tax on just the interest income rather than on a distribution of that amount, that I've already previously paid income tax on.

But, when getting funding for deals, from either hard money lenders or other lenders, will having that loan on the books create a roadblock that could make getting funding more difficult, potentially costing me deals?

Any advice or thoughts on the topic would be appreciated.

1 Vote

Hello

I'm looking to form an LLC for flipping properties in Colorado and I'd like to work with a lawyer to make sure everything is setup correctly for my short term and long term plans in real estate investing. While I can search for lawyers and can even find real estate lawyers, I am having difficulty finding one that specifically works with real estate investors and practices in Colorado. I've searched the BP forum and haven't had any luck finding any recommendations so would anyone be able to provide a good recommendation for an investor-friendly lawyer in Colorado?

1 Vote

All Forum Posts by: Michael Laurencelle

Michael Laurencelle has started 2 posts and replied 3 times.

Post: Capital Contribution or Loan to fund LLC for flipping?

Post: Capital Contribution or Loan to fund LLC for flipping?

Post: Looking for lawyer for Colorado LLC formation