All Forum Posts by: Roberto Vasquez

Roberto,

Most people use their LLC's to separate their government name from their business for tax reasons and liability. I personally prefer separating the two for everything when it comes to business. My personal is the only property that I own under my government name, everything else is under different entities. I hope that helps and best of luck!

Pros: (1) Begin building business credit history for future loans and banking products directly to the LLC. Helps if you decide to buy commercial real estate. (2) Expands options for borrowing money. Many states require an LLC to borrow hard money. (3) Decreases liability, minimally, from legal action.

Cons: (1) Costs to own and upkeep. (2) Often adds a costly step to buying property, as banks tend not to lend for single family housing directly to an LLC and therefore must be transferred from personal ownership into LLC. (3) Only limits liability if set up correctly—and many aren't. (4) Transfer from personal name to LLC can trigger "due on sale" clause.

I'm probably the rare one around here who owns all my rentals under my own name. Don't plan to change that. Maybe I'll change my mind, but I get the same tax advantage either way.

I couldn't figure out your original question and am surprised you would ask how to earn the money to pay back a hard money loan before you already had some sort of investment planned.

Hard money loans are very expensive and they usually come with some high upfront origination costs and their interest rates are high and their penalties are high. Hard money loans are nothing a real estate amateur should get involved with because even many experienced and professional real estate investors and house flippers make huge mistakes and lose money.

Hard money lenders most-likely will not loan you money, if you don't have extensive real estate experience, even if you present what you think is a super great and profitable deal, because while hard money lenders will loan whatever percent it is of the after repair value of a property the hard money lenders don't really want to have to take your property away from you and get into the real state business.