LLC
I've been advised to buy property as an LLC for liability reasons. I have a partner who will be passive and leave all the searching and decisions entirely up to me. Should we set up the LLC before we do anything else? Also, I'm curious what is involved financing wise when purchasing properties as an LLC. I intend to use a mortgage broker. Will they simply scrutinize both of us as individuals when making the lending decision? I am assuming the financing and mortgage will not even factor in the LLC in the matter and will treat it as 2 partners buying property jointly.
First, I would set up whatever operational agreements before doing anything. In regards to buying in the name of your LLC, you will still be held responsible for the debt. In other words, you will make an offer to purchase as an LLC, the lender will have both you and your partner to fill out loan forms and so you will both be liable for the debt. The title to the property will be held in the name of the LLC. After you build your business, some banks will loan the LLC money for real estate.
I have a single member LLC in my state and a two member LLC in another state to invest there. He does to active part, I am passive. He as the time, I have the credit.
Ron
When operating under an llc, particularly when acquiring your first property, do they run the credit of both partners and average them, or do they look at the llc as an entity, not with bad credit, but with no credit at all?
Just wondering?
[addsig]
They will most likely look at both (or all) members credit. As long as one of the members has good credit it should go well. When beginning the LLC has no credit.