I started my LLC not knowing much in the way of getting a mortgage for my first investment property. It's been a few months and I talked with a mortgage lender and they explained how they cannot assign a mortgage to a business and that my rates would be better if I did a personal mortgage. I would have to go through a commercial lender to borrow under my LLCs name. So my question is, if I buy an investment property under my name can I accept rental payments under my LLC and then have the LLC pay me the amount of my mortgage payment. My LLCs account would then hold the security deposits and net income so everything stays separate from personal income and expenses. I would like to get cash flow in the LLC so that it will be easier to borrow under in the future.
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Accepting payment for personal realestate under business account? – 07-04-2016,01:54 PM
- Join Date
- Jul 2016
- Join Date
- Dec 2016
- Houston, TX
I would avoid holding the property in your name personally, but not for tax reasons. As an LLC, you're going to be operating as a pass-through entity for tax purposes, so the reporting of revenue/income won't change much. The IRS isn't going to be checking property records to see if you really own the property you're reporting income on. But anyways - the big reason to hold the investment in the LLC is for liability reasons. If one of your tenants, a vendor, or pissed off neighbor sues you one day down the road and has the chance of winning the lawsuit, you do not want your personal assets to be up for grabs in the judgement. If held under the LLC, they can only go after the assets held by that LLC.
That said, when you invest in other properties you should create other LLC's for EACH property. This limits your liability exposure for each property. I'd say this is especially true for apartments, where you're going to have more liability issues than with single family rentals. That mortgage company just wants to write you a mortgage and sell it, they don't care. Go with a bank that does a good deal of commercial lending. You can ask the bankers in your area who does this -they all know which banks like what kind of loans.
Let me know if I can help anymore. I'm no expert by any means but I know a few things.