Saturday, May 10, 2008

Whatever You Do...Don't Buy in an LLC

Buying my most recent property in Spartanburg, SC has become a royal pain. Besides the fact that my property manager quit the business on the same day I closed (and thus had to scramble for a new one), and besides the contractor I hired wasn't all he was touted to be (I should have expected that one) - there was one thing that still plagues me to this day, 6 months later...

I purchased this property in my LLC. In the current mortgage climate - there is no bank I have found that will fund this. I had several mortgage brokers looking for a loan but there were no takers - most of the banks that used to do this have gone out of business.

I quickly re-titled (using a quit claim) into my personal name but since the transaction was under a year old the banks were looking at the HUD-1 and seeing the purchase in the LLC name.

After finally finding one bank who was willing to do the transaction for a lesser LTV, I found out they are closing there doors on June 15th. So now I still have no loan and I am exposed since I have a renter in the house titled under my own name.

To make matters worse - in the ensuing 6 months the area homes have lost some value so my appraisal has now been reduced by $20k!

I am calling some local banks to see if they will hopefully help rememdy the problem. I also found out that if I had used a trust and made me the beneficiary, that would have been an easier situation in which to get a loan.

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