This is the perfect time to invest in residential real estate, whether you are using a self-directed IRA, LLC, S Corp, or putting investment property in your name.
Mortgaging investment property maximizes your buying power saving cash for additional investments, but there are some things you should consider before applying for financing on income producing property.
When you apply for a residential Mortgage, most lenders limit the total number of mortgaged properties that you can have in your name to four, including your primary residence. This makes building a meaningful portfolio a challenge.
Properties owned and mortgaged in your own name will always count against your total mortgages allowed.
If you have a self-directed IRA, and invest in real estate, mortgaged properties are likely to count against your total allowable mortgaged properties limit, because title is normally held in the name of the IRA in trust for you.
Properties owned and mortgaged by an LLC, even though financed with commercial loans, would also be included in your four mortgaged property limit.
There are a couple of ways to structure your finances to maximize mortgage-ability for future purchases!
If you are married, you can purchase and finance income property individually enabling each spouse to have four mortgaged properties, doubling borrowing power.
You can form an S Corp to purchase and mortgage properties and avoid having any of it’s holdings count as mortgaged properties.
There are many wonderful opportunities available for real estate investors. If you have been dreaming about investing in real estate, this is the best time in history to jump in!
For more information, please contact:
Ann Arbor, MI 48104