OfflineHello,
Does anyone have any information regarding starting up a corporation or LLC in order to buy real estate? I have lousy credit and I've heard you can start a corporation or LLC to establish good credit (for the corporation) and then buy real estate. Is this true? Does anyone have any input on this or can point me in the right direction of where to get more information on this subject? Thank you.
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I am kind of undecided on this issue. I think it would be a great thing to do, but I am debating whether or not to try it out. From what I understand if you establish a LLC, you are seperating everything into two categories (Personal and Business) If you do business under your LLC and the company goes under, you are not personally responsible for the debt your LLC accumilated. You have to keep detailed records of all your transactions and make sure that no personal finances get mixed with the LLC or then you will be liable. Try going to legalzoom.com. There you can find more information and decide for yourself. Plus you can do it all online there. They will draw the paperwork and send everything to you no matter which state you are in. Hope that helps.
I have an LLC, and from my experience NO bank would give my LLC a loan. All the loans had to be in my name. Then I could do a deed transfer and put the house under my LLC. But the morgage would still be in my name. The bank would have to agree to transfer it to the LLC. I dont think many will!!!
Don't Wish the Past, Create the Future! - DH
Start the LLC up yourself through Legal Zoom, your accountant, or a real estate attorney. If you get a line of credit with a bank, you should be able to close in the LLC's name. Your liability decreases when you separate your personal finances from your business finances. Some people create a separate LLC for each property they purchase. That's up for debate. The important thing is to have at least one LLC for your real estate investing.
An LLC per property is expensive. Remember that LLCs DO have costs. You pay the state every year. A better idea is one land trust per property with the LLC being the beneficiary of each trust.
There are copmanies that will help you to establish your business credit and register you with all of the 6 business bureaus. These are different than the personal ones. usually you will pay a fee for this and they will get you say
100,000 in credit lines. You may be able to do this on your own though,
I just started today looking into this for my LLC. However I did buy a house and put it in my LLc name. May next step is trying to get the bank to lend me
money on it in my LLc sense it paid for.
Try going visiting Dun & Bradstreet website. They have all sorts of products for businesses but they also offer the service of helping you build your business credit file. I have used them for years in prior businesses and I am going to use them again with my real estate venture.
Anita
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TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
Anita,
I noticed that you have wisdom and enough knowledge in this business. Would it be
to email you directly if I had questions on your personal email?
thanks
thanks for the compliments. I would be glad to help you with whatvr I could but there are lots of great people on the site that could give you even more information , like dgadmin or cbrpower. But I am here is you need me just send me your direct email.
Anita
******************************************
TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
Is an LLC worth looking into as one of my initial steps in the business? I am thinking of holding off until (hopefully) making my first one or two deals before I look into it. It does cost money to have an LLC and I would think, like you all have mentioned, that getting a loan in your LLC's name is difficult unless having prior transactions in the business.
Any opinions or objections of taking this approach?
Thanks
Greg
as long as you want. You dont need to have one at all if you dont want one. I like llc's because it can protect me and/or my property that is under the llc name instead of mine.
D
Don't Wish the Past, Create the Future! - DH
If you have nothing to protect ie personal assets then you do NOT need an LLC. Even after a couple of deals, insurance will go a long way to protecting you.
My friend's credit is totally ruined because he lost some properties to foreclosure. Can he still get a loan from a Hard Money Lender to get back in the game ? If yes ,who's a good one to work with?
The reason to this is because when you create an LLC or corporation you start fresh with credit. What you need to do is establish credit much like you would for yourself.
There are companies that will establish credit for you such as Capital Access Group. You can also do a few basic things to obtain credit.
- Work with a bank that will give you a loan under the business and not your name. US Bank does a small loan like this.
- Work with companies that will give you a credit card under the business name and not yours. Radio Shack will give you a line for your business equal to the amount of money in your checking account for the business.
The idea is to get about 5-6 of these lines or cards running. Use each of them every month. A nominal amount of a few dollars is fine. Once you get the bill pay it off. If you do this for a few months (6) you should have a decent credit score for your company which will allow you to get mortgages in your business name.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Another option that you may look at is a Series LLC. Not all states have adopted this but quite a few have. The Series LLC is an LLC with different compartments that you can house your properties independently of each other.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
The key here is if you have nothing to lose. I would be very cautious of doing real estate without any anonymity or legal separation of the property through and LLC or corporation.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Many Hard money lenders do not look at your credit or income.
There are really two types of hard money: conventional and unconventional. A conventional hard money lender usually has direct ties to a bank. The conventional hard money lender will usually require information just like a regular bank loan. The unconventional lender is lending their own money and it is completely up to them what they accept.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
The key here is if you have nothing to lose. I would be very cautious of doing real estate without any anonymity or legal separation of the property through and LLC or corporation.
If you are just starting out in RE and have little or no assets, one of the last things you should worry about is starting an LLC or land trusts or personal property trusts. No one is going to sue you to get your 1995 Camry.
You should learn all you can about what is and isn't a deal, where to find them, what to do when you sign them up (ie how will you get paid).
For most people turning quick cash (sandwich leases or assigns) is much more important than SPENDING money to set up a corporation.
And as an aside... if you are doing flips or assigns an LLC is NOT your best vehicle. LLCs are phenomenal for buy and hold, but arent perfect for everything.
say I am just starting as a REI. I own my OWN house some cars ect. I then buy my first REI house in my personal name and decide to hold and rent. A few months later I get into a car accident which is my fault. I get sued for a *sheet* load...say bye bye to my personal house and my REI house to cover the law suit.
Now if I had my REI house and my personal house in an LLC, they cant touch
them!
Millionairs have NOTHING in their own name.
OWN NOTHING, CONTROL EVERYTHING!
D
Don't Wish the Past, Create the Future! - DH
Why don't you have car insurance?
And an umbrella policy if you have significant equity.
If you just bought both houses you may not have much in the way of equity.
Don't think that starting Joe's LLC is an anti-liability panacea. Any attorney worth his salt will try to pierce the corporate veil.
If it's a 1 person LLC, his chances of doing so are better than you think.
Here is the best lawsuit protection (and its not an LLC): Just dont GET into a lawsuit.
A very fine lawyer I know frequently says, "If you get into the courtroom, you have already lost." What he means is that even if you dont lose the case, you WILL lose time and money.
It is fine to deed your keeper properties into trust and have your LLC be the beneficiary. I did it. I recommend it. But it should NOT be the first thing on your REI to do list.
LOL....ok say I get into a bar fight and he sues me for millions. If everything is in my name....everything is gone!
And yes your right getting an LLC should not be the first thing on a new REI's list. But it is a safty net once you have property to protect.
D
Don't Wish the Past, Create the Future! - DH
Exactly my point. Dont get into a bar fight and you wont be sued for millions. I never have.
You guys have some interesting scenarios. I think if you go back a re-read your own post you may find the answer to the question yourself.
DONT WORRY BE HAPPY
Anita
******************************************
TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
I too have never been in a bar brawl...
yeah but...
D
Don't Wish the Past, Create the Future! - DH
http://www.4hb.com/20040203080101.html
Don't Wish the Past, Create the Future! - DH
"If you accumulate wealth, you become a target for lawyers, the IRS or someone with less than you."
Being in it for four weeks now, I can see keeping yourself out of the obvious bar fight is the right thing and taking the precaution of having an LLC is the right thing. It cost me $50 to set up my LLC and a little time and effort. I quitclaimed our first property into it and now we are closing on our second property and will use the LLC again. We also started a web site (just yesterday) cost $48.00 to register a Domain Name and get a site for three years which now give us a professional looking business, personal email, and LLC altogether.... nice professional image and protection under $100.
All of your posts, insights, and tips in these different forums have been instrumental in my own business development..... Thanks!
Regards,
DeJor Properties, LLC
Are there no state fees for your LLC? Who is the registered agent for your LLC? They are doing it for free as well?
Every two years an LLC has to return an update to the Secretary of State and I will be filing taxes under the LLC which costs the LLC some money.
I am the registered agent. In the ARTICLES OF ORGANIZATION that we submitted (lawyer wanted $550 to submit them) only one person can be the registered agent, but in the simple Operating Agreement that we created (lawyer wanted $1300 to create), both my wife and I are listed as equal owners who may hire employees or apoint officers.
Both of these documents were easy to prepare in Microsoft Word.
Regards,
DeJor Properties, LLC
I applied online for an EIN (Employer Identification Number) for tax purposes, if we end up issuing a 1099 to someone, and for banking reasons.
Since I did it all myself, I had some minor difficulties..... (well, what do you want for $50 bucks?)
The Secretary of State mispelled the LLC company name. Took two phone calls and it was fixed over night with no additional costs! The IRS online process for creating an EIN did not have enough space in the online form to spell out the entire business name, so, after-the-fact I contacted the phone number on the EIN reciept and learned that I need to send a simple request to a paticular IRS office. These issues added two or three days of extra follow up but..... the business name and EIN are now aligned.
Also, I just paid $48 at www.ipower.com for three years of our own DSN name www.dejorproperties.com with web-hosting and email. Over the next few weeks I will create a website to enhance the professional appearance of the business and allows us to have 30 email addresses for no additional cost.
Regards,
DeJor Properties, LLC