Using An LLC When Wholesaling - Good Or Bad Idea?
I need some advice from someone with experience in this matter. I'm in the process of setting up an LLC for my real estate investment business. Although, I want to get into wholesaling for the cash flow and since I won't actually be taking title to these properties, I'm not sure if using the LLC in this instance makes since. Also, when direct mailing potential sellers, should I use the LLC name/address or simply my own. Please help!!
I may be able to shed a little light on the matter. I wouldn't try to use the LLC on the title to the property or loan for the reason that noone will want to loan money to a company that has only been open for a few days. Open the LLC use your own name to buy the property and then flow the money through the LLC. You should only have to pay tax once and you show the lender in the future that the company is profitable.
I would start it in Delaware by the way they have the most lenient laws and it is much cheaper than most other states.
If someone slips and falls on your property, do you want them suing you or your LLC? (of course you have liability insurance on the property, you're not a schmuck).
I don't think lenders will balk at a deal where the LLC takes title, even if the LLC is formed the morning of the closing. Talk with them. Chances are they'll just require a personal guarantee and everything will go just as it would with you personally in the driver's seat.
If you're really lucky, you can even sell the LLC and substitute the buyer as a new guarantor, with the financing still in place.