To those of you who are purchasing in the states, is it best to set up a LLC in Delaware where lawyers on the net recommend, for why I don’t know, or to set it up in the state you purchase the most property in?
Also if you end up purchasing in a few states then where?
Any idea how Dolf De Roos does it?
Do you have one parent LLC or S corp own all the multiple LLc’s for the multiple properties or??????
Thanks for your advice & time if you have some to share.
Sincerely,
SolomonBefore you decide on what State or the structure you want to set up i think you need to ask yourself if you are looking for finance on the property or not.
If the answer is Yes then you will need to be purchasing in your own name as a Foreign National and deed the property into your LLC or SCorp after closing.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 6.89%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Thanks Richard.
Would I still set up the LLC in the same state as where I buy the property or in Delaware or Nevada or where?
Sincerely,
SolomonHi Solomon
The questions you ask are very complicated to answer quicky on a forum. Firstly i’m not a Lawyer and i can only tell you what attorneys and others in the US have told me. You need to check if what i say is correct.
One of the reasons people promote Nevada is that it is veiwed that Nevada offers a higher degree of assett protection as the owners of the LLC can remain undisclosed – However if you follow Richards advice and transfer it after you have bought it then your name will be on the public record for all to see.
One reason why people like Delaware is a product called the series LLC, it offers many LLC’s for the price of One.
Then you have the option of the LLC in the state the property is in. This may prove to be the best. I was talking to a lawyer in New York over 15 months ago and he claimed that many of his New york clients were setting up Nevada based LLC’s but not registering them in the state of purchase and therefore were loosing the asset protection status of LLC’s (i don’t know if this is correct but he’s an attorney not me).
Ok so it also comes down to how many properties are you going to own as to how many LLC’sd you own. Some advisers are recommending a new LLC for each property, others think that is way over the top (i do also)
At the end of the day i’ve decided to set up a Texas LLC because thats where most of my US properties are and where my attorney is.
Oh and in regards to Richards comments about finance. The US based broker i use, Benny from West Houston Mortgage has access to banks that prefer an LLC so no need to go through the trouble of transfering after the purchase.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auThank you all, every bit of info helps.
Westan, when you have been purchasing property over there what type of loan are you using? Fixed 30yr, variable or have you used vendors finance & if so how does that work?
Also for your very first property, did you pay cash & then use the equity in that to get another loan or did you put 10/20/30% of the purchase price toward the loan?
Also thanks for taking the time in answering my questions.
Sincerely,
SolomonHi solomon
with the first property i purchased it was for cash in texas for $55k i spent about $13k on it and then later financed it on a 30% deposit no doc loan.
i haven’t purchase anything by assuming an existing loan but a number of our clients have woith the support of our us based team. i don’t have the full handle on all the facets yet.
In the US with the finance contacts i use we have to put down 20% for a ful doc loan or 30% for a low doc.
In some situations we can get finance to carry out renovations also which is fantastic.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auWestan, now with all your experience, if you started from scratch again would you do the same? As in buy the first house cash and then refinance from there?
Regarding the loan are you going for fixed & at what rate are you able to get it at?
Sincerely,
SolomonHi solomon
well it does come down to the individuals situation, paying cash wasn’t an idssue for me at the time and by paying cash when i did finance out the property 12 months later i got money out on the new appaised value of about 82k from memory.
And at the time i hadn’t meet people who could give me fiannce on the buy price plus the rehab cost.
So knowing what i do today i suppose i’d just buy the property with finance and finance the reno cost also.
My loans are at about 6.5% and are prinipal and interest loans.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auHey Solomon,
As far as whether or not to structure yr property in an LLC straight away or after yr loan doesnt matter with certain lenders out there i have found as even if yr property is in an LLc ,they can actually take it out of the llc,(ligitamately) then put it back again after the loan is set up.(on the same day).Also,as far as whether its better to pay cash and refinance ,or get finance when u purchase,is that it does depend on the circumstances.
A benefit can be if you have managed to buy the property underpriced or are adding value some how,you can pay cash then add the value/rehab (if yr strategy) then go to the mortgage company to get re valued at full market price and get the loan and pull all or most of yr cash out of the deal!
The reason this is the best way in this situation is because the US mortgage companys wont refinance the property at the higher value for at least 6 months(some 12) after purchase.And also if you do do it even after the 6-12 month s later time frame you have to pay the 3.5K ish loan set up and closing fees again .(taking some of yr profits)As far as US set up structure I know you could ask 6 different experts in the field and u would get different answers.
I have taken the opinion of having an LLc per 5 to 10 propertys.Tryiing to keep the highest risk ones together. Then i think it is wise to have yr full insurance cover on every property.Also on top have an increased blanket policy that covers yr whole portfolio.
I am still making enquiries as to whether you can just have one (largely increased cover)policy over the whole lot without the individual policys on each property as well .(I think this will depend on how many propertys in the portfoilio as to what insurance companys can offer.)
all the best
lukeWe’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Thanks Luke,
For each answer I get it seems there are another 10 questions to be asked.
Have you purchased many properties in the States? How did you overcome the 6 months to be able to refinance? Did you find a way to get around the $3.5+ refinance fees? Do you have a recommendation on financial institutions over there?
Sincerely,
SolomonMany lenders have no seasoning requirements however will only allow you to refi upto purchase price (of course there are ways around that).
We have now successfully completed 2 separate Vendor Finance deals where the client have had to put down NIL / ZIP / Nothing.
Vendor finance is enormous in the US and is a way that FN’s can get into the market without the usual hassles.
Richard Taylor
Residential & Commercial Finance Broker
**NODOC loans from 7.14%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Would it not be almost impossible to buy a property say 25% under market value & get vendors finance?
With VF what are the most common terms given?
Sincerely,
SolomonHey Solomon,
to answer yr earlier question,
I have purchased a fair few propertys in the states.Some of these were “subject to ” existing mortgage.I really like this option.It makes it so much easier for a foreigner as setting up loans and stuff can be a bit of a headache.
Some of my other propertys i purchased cash up front and then mortgaged out.I had to pay the up front fees which are mega pricey with my lender (he is one of very few who do 80% LVR under 50K loans) on the first one (about 4.5K)but after that go to 2.5K on second property then 1.5K on the third then 1K on fourth and so on.
Most of the lenders charge this sort of price with these loans to us foreign aliens.
(note :you can choose interest only or P&I if u wish)
If u PM me i will give u details of the lender, or talk to richard on this forum he mentioned he is doing similar 70%LVR loans for $995 fees.(although i think u would need to wait 12 months to refinance with him if u paid cash)We’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
You can expect to pay around 8 to 9% interest on vendor terms with genarally a deposit of 10% depending on location and who is offering..
T o add to that you can usually buy with 10% equity in the property as well
Something I will be into more down the track.
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