What’s in a name?
We’ve discussed exit strategy, process, acquisitions, and many things in between. Let’s talk about entry strategy, specifically the name
There are as many answers to the question of entry strategy as there are options to purchasing real estate. There is flexibility in mixing business and personal, the purpose of the property, interest rates, and taxes. Let’s focus on the name under which you should purchase a house to fix and flip so you can maintain better control over your exit strategy.
Why does your exit strategy determine your entry strategy?
If you are buying a property with the intent purpose to flip it, buy it under an LLC.
If you’re buying with the intention to hold the property–meaning you’re going to borrow hard money as a short-term bridge, fix the property, and refinance in your name to then hold long-term, then finance it in your own name.
If you’re going to bring in a credit partner–someone who has a great credit score and will qualify for a refinance–then you will finance it in their name.
Why is this important, and how does it affect your exit strategy? If you buy it under an LLC and determine that you can’t sell it or flip it, then have to refinance it and hold it long-term, here’s what happens;
– You bought it as an LLC,
– You then need to deed it to yourself to get financing,
– You then deed it out of yourself and back into the LLC for asset protection,
– All of this results in a clouded title.
If you’re going to sell that now to an end-user buyer, they’re going to have a hard time getting financing because you’ve clouded the title and made getting a loan nearly impossible without 8, 10, or even 16 months of seasoning.
Guess who has to cover all those costs.
Let’s get you in and out as soon as you can to turn a good profit, and onto the next property. Don’t get stuck with a financially draining property because you didn’t plan for an exit strategy.
That’s why your entry strategy for a property–under whose name you purchase the property–is important. As always, talk to your lender about your options and requirements. Questions about financing? Call Cogo Capital at (800) 747-1104 to talk about terms.
As a full-service Private Money lender for real estate investors, we do most of the leg-work for you, while you build up your real estate portfolio and cash-flow all your deals. Whether it’s for wholesale, rehab, or buy and hold for long-term cash investment deals, Cogo Capital delivers fast and easy access to Private Money. We’re an equity-based lender which means we care more about the property’s merits, and don’t focus on poor credit, or some of the other factors conventional lenders use to rate the risk.
We offer a full service Private Money platform that will help you through your entire deal from application to closing. You don’t have to make any awkward phone calls to strangers for funds or worry about drafting documents, the HUD 1 statement, or pulling title.
Whether you need fix and flip loans, a rehab ARV loan, or a cash-out refinance, just fill out the quick and easy application above and we’ll be on the way to getting your deal funded. After reviewing your application, and provided your property is under contract, we’ll contact you for the rest of the information.
Cogo Capital offers quick turnaround, excellent terms, and millions to lend. Cogo Capital serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans.
Author: Lee Arnold not only teaches real estate investors how to successfully invest in real estate but he also regularly invests in the local Spokane market using funds from Cogo Capital. He and his team buy distressed properties and turn them into flagship homes, attracting new buyers and money into the local economy.
Not only does he do this in the local community, but he also helps many communities throughout the nation. With a comprehensive educational program and a private capital network, Lee instructs thousands of people every year on how to safely and wisely invest in real estate. He then gives both new and seasoned investors road maps to invest, and the funds necessary to purchase and rehab properties in communities all over the country.