Stater Question: LCC Corp
My friend and I want to start a LCC company for flipping property, and have a set goal and working terms laid out as well as initial cash start up. We are looking to use 1031 to avoid paying capital gains taxes on anything and keep expanding the portfolio, but what i am concerned with is how an LCC can buy a property.
A natural person has to be on a mortgage (what i do for a living) so Im not sure how to get the financial responsiblity into an lcc and who would be able to hold onto a note like that.
Just quick claiming the deed over isnt enough because if I (the natural person) is the one buying the house and quick deeding it to the lcc, i still have that property on my personal credit report as financially responsible which would limit my debt to income ratio and credit, which i do not wish to do.
Does anyone have any ideas for a situation like this
You will have to work on establishing credit history, income and assets for the LLC just like you would for a natural person (you). If (You) have no income, no credit history, no assets (basically you didn't exist before you showed up asking for a loan) how much credit could you qualify for? I'm thinking zero to none.
Are you talking about an LLC (limited liability Corp.)? I just recently set up an LLC and have had to use my personal information for lending purposes.
I couldn't find anyway around it. If you do, be sure to let me know.
good idea on the 1031 Tax Free Exchange contingency.
I'm not sure how my attorney does it, but when I sign contracts, I sign them- ABC LLC by Name, Managing Member. It was my belief that the LLC held the deed and title even though I personally guaranteed the loan.
LLC = Limited Liability COMPANY
but how do i get the company to be financial responsible for the debt of teh house
buying it personally and quick claiming the deed would still have me be personally responsible for the financial burden
any ideas on this>?
but how do i get the company to be financial responsible for the debt of teh house
buying it personally and quick claiming the deed would still have me be personally responsible for the financial burden
any ideas on this>?
Until your business is established, it will be nearly impossible for your business to qualify for financing without you tying up your credit with it.
One option for you would be for you to purchase your properties using owner financing. Subject 2 would be another viable option for you until you get business credit established for your LLC.
I'm a newbie and haven't started yet but have been exploring using an LLC or S Corp. You mention using owner financing until the company has a credit history. How does owner financing work?
owner financing is a privately held mortgage, probably not viable in most cases (i do mortgages for a living)