Buying or Selling a Home/Home under a LLC

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Expert: - 12/30/2008


Question
QUESTION: Can I buy a home under my LLC/EIN # even though I have no credit under the LLC?  I ask because my personal credit is not good enough.

ANSWER: Hey, CeCe.

Generally, yes, corporations and businesses of any type can buy property. However, they'll be subject to the same qualifications as an individual. Sometimes that means that the bank will require a personal guarantor if the company is too new or doesn't have good cash flow, etc.

It's generally much easier for a person to buy property than it is a company because the company has to have the approval of many more people and/or has to provide much more documentation.

Good luck.

---------- FOLLOW-UP ----------

QUESTION: So, how does a new LLC establish credit and are the guidelines the same to purchase a vehicle?

Answer
Hey, CeCe.

A company establishes credit just like a person does, by putting everything in the company's name. That's where the personal guarantee comes in, though, because if you're the only person employed by the LLC -- or you and one or two other people -- then you're going to be asked to guarantee that is extended to the company.

The easiest ways to establish credit are:

1 - go to your bank and ask for a secured MasterCard or Visa. You'll give the bank, say, $1,000, and they'll give you a Visa with a $1,000 credit limit.

2 - make sure that your phones are in the company name. That's credit from the phone company.

3 - establish some accounts in the company's name with companies like FedEx, your copy store, Home Depot, and similar stores that service your industry.

It's the same with a car but the car should be easier to buy than real estate. Make sure buying the car is in the company name so that credit is established.

Russel

Buying or Selling a Home

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Russel Ray

Expertise

Through home inspections, I provide an education about real estate. I'm one of those rare home inspectors who has been involved in real estate in many different capacities: as a Realtor (in Texas), as a property investor/flipper, as a teacher, and as a marketing expert (for Realtors and home inspectors). I believe that my experience as a Realtor and property investor provides me with a different viewpoint about home inspections in that I work for my Clients, but when there are other people involved in helping my Clients, then I firmly believe in helping them, too. That includes Realtors (both the seller's and the buyer's), repair professionals (e.g., plumbers, electricians, etc.). If I can get all the players (seller, seller's Realtor, buyer, buyer's Realtor, and repair professionals) playing in the same sandbox together to accomplish goals as a TEAM (Together Everyone Accomplishes More), then I believe I have succeeded in my job as a home inspector. My profession is, in my opinion, much more than simply documenting the condition of a property and then take the money and run. I am also a rare breed in that I don't believe that one inspection fits the needs of all Clients, and I have led the industry in understanding that fact. For example, the goals of a property investor are far different than the goals of someone buying a property to live in. The goals of a seller (a pre-listing inspection) are far different than the goals of a buyer (a pre-purchase inspection). To that end, I offer 14 different types of inspections, e.g., STANDARD, LIST, RENTER, BASIC, MAINTENANCE, SPOT, and more. I believe in giving the benefit of the doubt to all professionals in whatever industry they represent until they prove me wrong.

Experience

Over 42 years in all aspects of real estate--building homes, renovating homes, inspecting homes, Realtor.

Organizations
National Association of Certified Home Inspector, Better Business Bureau of San Diego

Education/Credentials
Graduate of Texas A&M University; College Station, Texas

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