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I am in NY. I am purchasing an investment property

Customer Question
multi-family home with a personal...
I am in NY. I am purchasing an investment property multi-family home with a personal mortgage. Is there a way for me to open an LLC and process the rental income through an LLC so that the LLC can purchase a property in the future?
Submitted: 3 months ago.Category: Finance
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Answered in 2 minutes by:
10/12/2017
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 3 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 13,242
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name's Lane.

...

Sure, set up the LLC with NY Sec of state, get the EIN from IRS, open a business account for the LLC at a Bank and Puchase using LLC funds.

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Customer reply replied 3 months ago
But is that only for a cash purchase?
Customer reply replied 3 months ago
Is there a way to get financing/ a commercial loan by showing the LLC making income by collecting rent from my personally held property?
Financial Professional: PDtax, CPA, MBA replied 3 months ago
PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 4,773
Experience: Tax professional and business consultant for 35 years.
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I'mCustomer I see you asked for a new expert. I work in NY. I can assist.

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Financial Professional: PDtax, CPA, MBA replied 3 months ago

You could buy the property personally, secure the personal mortgage, then contribute the property to an LLC. There are a few issues:

Your personal mortgage will be based on your income, assets and creditworthiness. It likely won't require the 20% down commercial mortgages do.

Once you buy, your agreement with the bank may stop you from making this contribution legally. The bank will have a security interest, evidenced by a mortgage, and likely won't allow you to transfer ownership to an LLC. They may allow you to contribute at closing if you can argue you need liability protection, but the bank will likely want commercial rates and terms, including that 20% down payment.

Your bank and its rules may differ.

A commercial loan would use 75% or so of the net rental income as a basis for lending, with your personal guarantee. the bank will have your 20% down, and use 75% of net rents to protect themselves if you have vacancies. Again, your bank rules may differ.

I suggest trying to argue that you want the LLC simply for liability protection. Worth a try.

Thanks for asking at Just Answer. Positive feedback is appreciated. I'mCustomer

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Financial Professional: PDtax, CPA, MBA replied 3 months ago
Customeragain.

Can I ask you to please rate my response to complete your request? Five stars is best.

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PDtax
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