Career Shift: Starting a RE Investment LLC

Hi everyone,

A friend and I had the idea to start a small time RE LLC. Our long term (emphasis on long term) goal is to build up the LLC's rental property holdings, and someday, when the income displaces our current income, commit to managing the LLC's investment decisions full time and live off of a piece of the NOI.

Most of my questions revolve around financing. I'm really trying to find a way to finance several properties. And similarly acquire several properties quickly, without having to manage multiple mortgages.

Has anyone on this forum done this? If so tips and advice would be greatly appreciated. 

Thank you.

 
Most Helpful

Not sure why there's MS here - These are all valid questions are definitely need this information to move forward

To OP - It really depends on what you're looking for. If you're just starting out and looking to buy smaller residential or multifamily <4 units, they'll likely make you hold the loan personally vs the LLC and will definitely need to guarantee. If it's a larger property, you can likely put a mortgage on the LLC but will likely still need the guarantee the loan.

For the most part, if you're financing an asset, the loan will be tied to that asset, and each time your make a change to the loan, it will be through a formal refinance. There are exceptions to this, as some lenders will make loan modifications for you or you can do portfolio level financing, all of this depends on what types of assets your financing, your financial wherewithal and experience

 

There are a couple people on here running their own shops, also some great threads that go into what your asking. Also check out ‘real estate asset protection’ on youtube, great channel that goes pretty deep into the legal and financial side of RE, it’ll answer a lot of your questions. I’m not affiliated in anyway btw.

 

I can try and share my $.02 - take my experience, but I'm not a guru. Just some guy off the internet ;) 

I'm currently under contract for a 6 and 8 unit in a tertiary Midwest market. I've also been putting offers on larger properties (20-50 units) and have been dealing with portfolios too. 

My legal structure is this - one parent company (Parent Co LLC) and every property has its own LLC (Child LLC). This way, if someone sues the owner of that property, Child LLC isn't related to my personal name. If they try to see the owner of Child LLC, they'll realize it's Parent Co LLC and there's no way to trace it back to my personal name. 

As for mortgages, I get it written to Parent LLC. For multiple properties, you can look into what's called a portfolio loan or a commercial loan where it's based off the NOI of the property. Look into a local bank or credit union if you're in a smaller city, the larger banks often don't care about smaller unit sizes (imo)

 

Hi everyone,

A friend and I had the idea to start a small time RE LLC. Our long term (emphasis on long term) goal is to build up the LLC's rental property holdings... I'm really trying to find a way to finance several properties. And similarly acquire several properties quickly, without having to manage multiple mortgages.

I guess it is worth asking what you really want to achieve here.  "Long term goal" and "acquire several properties quickly" are more or less mutually exclusive.  If you're truly thinking long term then buy small owner-occupied rentals, because you'll get favorable financing.  What you seem to be trying to do is launch a MF platform in the space of ~5 years, which is not at all the same and obviously is more risky and more difficult to pull off.

 

I, like you, wanted to create my own business, and I didn't know what to do. In general, from the very beginning it was necessary to find an experienced person who will help and tell you how to do everything correctly. But I decided that I could do everything on my own and started reading a lot of magazines, books, websites to gain experience from other people. One day I came across a very interesting article on this magazine discovermagazine.com. It turns out that having a business is quite a difficult job , and you will just need a lot of documents, so you should find a person who knows how to work with documents, and can help you at any time.

 

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