All Forum Posts by: Scott Lundgren

@ Elizabeth James

You can absolutely do what you are suggesting, the follow up question is when you should actually do it. LLC's are great for tax shelters why you are building a portfolio, but generally you want to max out your conventional loans before you transition to non-conventional loans that would be for the LLC. Currently you are allowed 10 conventional Fanny Mae loans, these are lower rates, and lower down payments than the non-conventional loans you are going to be using under the LLC. Lastly is the cost and time factors. Building credit for a business is similar to building personal credit, it takes time and money to accomplish, if you haven't started this yet it would be many months, maybe even a couple of years before the business credit is seasoned enough to get mortgages for investment properties. Feel free to reach out if you want to discuss this in more detail.

@ N M Clarke 

You can avoid the personal w2 income restrictions by getting into Private, commercial, or Non-conventional loans. Especially with the fact that you have 100% equity and only need to pull out 17%. Lenders will base the leverage on the performance of the portfolio, not your personal income. This will cost a couple of points more compared to a conventional Fannie Mae backed loan, and your downpayment on the new loan will be 50% on ave. The downpayment is steep but after 2 years you can refinance upto 75% and then repeat the process again as needed. You also want to have a consultation about using a 1031 exchange so you don't pay capital gains. That will cost you more than any leveraging fee's or rates. The catch of the 1031 is identifying properties in a short window (usually 90days or less). If you want to get some examples of properties you can invest into outside of your local market to get a dramatically higher ROI, or an introduction to some of the lenders that would allow you to accomplish this I would be willing to jump on a call anytime.

Mike,

Your CPA is correct in reducing your liability, individual LLC's will help reduce (but not completely eliminate) your liability between your different properties. What other replies are saying is also something to consider. If you create multiple LLC's you can either tax them individually, which will cost you more at tax time. Or you can create what are called disregarded llcs which will fall underneath your main LLC, at tax time you will still only have one filing. There are advantages and disadvantages to both options and you should seek the advice of a professional when making this decision. You have two different issues in play here, one is legal and the other is tax. I believe that your CPA wouldn't even suggest this unless he had a good reason for tax benefits. There are many real estate attorneys that can advise you on the legal side also. I happen to work for one that specializes in this exact area so if you need someone to work with PM me and I will get you in contact with him.

Gina,

I work for a company that creates LLC's for real estate investors and we work in all 50 states, we can create the operating agreement and articles of incorporation for you also. These documents are important and need to be done the right way. Call me directly or PM me on BP site and I will get you some additional information.

Scott Lundgren

800-680-1832, options 1 and 4 to reach me.

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