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Purchasing Seasoned LLC's |
dooner
1 Posts
Member Since: 07/18/2006
Freeland, PA
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Posted: 18:24 on 03-20-2007
Has anyone heard of or done this? I've found a company that opens LLC's sits on them for the required 3 years to gain commercial credit, then sells them for a small profit.
Has anyone tried this?
Is the legal?
Pros/Cons?
Very NEW Investor looking for advise.
Thanks for your input in advance!
I apologise if the is in the incorrect forum
[ Edited by dooner on Date 03/20/2007 ]
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commercialking
2699 Posts
Member Since: 03/26/2004
Chicago, IL
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Posted: 06:51 on 03-21-2007
In my experience simply sitting on an LLC won't make it credit worthy. I hear about such things all the time but I've never talked to anybody who arranged a line of credit for a 3 year old LLC without any assets or a personal guarantee.
Look, business is not magic. For the most part you don't create things out of thin air (like creditworthyness just by filing incorporation). Lenders are not stupid. They won't lend money to a 3 year old LLC any more than they will lend to a 3 year old baby unless its got either 1) credit history or 2) assets they can attach.
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finniganps
1831 Posts
Member Since: 07/25/2005
Walnut Creek, CA
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Posted: 11:53 on 03-21-2007
I love your response COMMERCIAL....you mean there's NO free lunch...come on...say it isn't so.
Here's the funny part....if you do that in CA as a resident, you need to pay $800/year in franchise tax for EACH LLC.....I think that could eat into your profits.
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woodsong
597 Posts
Member Since: 08/10/2003
Atlanta, GA
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Posted: 12:22 on 03-21-2007
Actually, there is such a thing as a free lunch. Commking and I ate lunch together last year one day. I can't remember who paid, but one of us did in fact get a free lunch. As I recall it was a good lunch too.
And really...what is the issue about not wanting to personally guarantee your loans? if you are able to do the deal and make the payments it's no issue. however...if you are barely squeaking by and don't know what you are doing well then, I guess no guarantee and limited recourse in the event of your default is a good thing.
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Kimtd
101 Posts
Member Since: 06/08/2005
Beverly Hills, CA
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Posted: 19:28 on 04-26-2007
1) Free lunch - Act like you're big shot investor, walk into a brokerage firm, and ask to speak to the president. I guarantee you'll get a big fat lunch for free! <IMG SRC="images/forum/smilies/icon_smile.gif">
2) What exactly does it mean to personally guarantee a loan? Will this loan be on your credit history? Isn't this going to be an issue when you're trying to acquire more properties (i.e. more loans)?
3) LLC credit - That's not entirely true. You CAN get some credit... for example, I had a vending business under a C corp.. it was eligible for 5k in credit card. Hehe... ;D
[ Edited by Kimtd on Date 04/26/2007 ]
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nbakerld
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Posted: 15:39 on 09-21-2007
no free lunch means somebody has to pay for it. it means that it didn't just appear. even if somebody pays for your lunch, it still wasn't free to you because you spent your TIME which is of value too.
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cjmazur
2920 Posts
Member Since: 07/23/2003
Cupertino, CA
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Posted: 21:34 on 09-21-2007
2) What exactly does it mean to personally guarantee a loan? Will this loan be on your credit history? Isn't this going to be an issue when you're trying to acquire more properties (i.e. more loans)?
personally guarantees come into play if the loan defaults.
Every loan application asks if you're a guarantor on another loan, so it may affect other loans.
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bargain76
1412 Posts
Member Since: 12/05/2003
Jacksonville, FL
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Posted: 22:47 on 09-21-2007
A personal guarantee means that you personally guarantee to pay the loan amount.
The lender usually requires you to complete a personal financial statement at time of signing.... so the lender knows you have attachable assets if the loan defaults.
Where a normal real estate loan is secured by the property, a personally guaranteed loan is secured by everything you own, excepting certain homestead properties.
_________________
"BARGAIN KING"
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GFG
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Member Since: 09/13/2007
Duluth, GA
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Posted: 22:53 on 09-22-2007
Actually there are such LLCs. The process is that they set up the LLCs and also establish lines of credit to build company credit in the process. I have a CPA and credit expert that I work with and he does it for business owners. Ive seen the outcome of it. Contact me if you have questions.
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CREATIVEFINANCING
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Posted: 18:24 on 09-23-2007
TRY THIS SITE ,THEY SELL AGED CORPS.
LET ME KNOW ****Must participate a while before posting URL's***
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InvestorMindset
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Member Since: 05/11/2008
Lemoyne, PA
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Posted: 18:05 on 05-11-2008
The following two posts responded to the original post by dooner (see below). I have also heard of such LLC's. I tried to respond to both of the two posted responses and received error messages.
If GFG or CREATIVEFINANCING are viewing this post, or if anyone else can shed any light on this topic, please contact me through this web site. I would like to have more information on this topic. Thanks.
InvestorMindset
Posted: 22:53 on 09-22-2007 by GFG
Actually there are such LLCs. The process is that they set up the LLCs and also establish lines of credit to build company credit in the process. I have a CPA and credit expert that I work with and he does it for business owners. Ive seen the outcome of it. Contact me if you have questions.
-------------------------------------------------------------------------
Posted: 18:24 on 09-23-2007 by CREATIVEFINANCING
TRY THIS SITE, THEY SELL AGED CORPS.
LET ME KNOW ***Must participate a while before posting URL's***
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omicron3000
31 Posts
Member Since: 08/18/2007
Philadelphia, PA
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Posted: 14:19 on 05-12-2008
Actually there are aged LLC's and aged Corps that you can buy. You cannot buy an S-Corp. An S-Corp is an election for a corporation. The aged corps and LLC's for sale are called shelf corporations. They are there to help you obtain lines of credit, easily. But some are total ripoffs and some are legit.
The secret to LLC's is that in the tax code, you EIN number with your LLC is tied to or attached to your SSN. This means that you are still personally liable even without a personal guarantee.
Some of these lines of credit would be know are corporate lines of credit, which are very difficult to obtain. In addition to that, it may take a few weeks or months before you see any results.
And you will also need to have 5 filings with Duns and Bradstreet, as well as filing with Experian Business. For anyone starting a Corp (the best entity of them all, even though many don't realize it), buying a shelf corp is far better than starting your own. Most lenders will not lend to companies unless they have been in existence for more than 2 years, because most businesses die in the first few months or year, due to lack of capital, lack of true projections, and lack of planning, focus and discipline.
I run my own LLC, and will be buying a shelf corp in the next couple of months. Many of my collegues have done this and were able to obtain massive amounts amounts of credit loans, based on there Paydex Score. If the company that you are planning to use, does mention Dun and Bradstreet filings or PAYDEX score buildup (which can take a few months depending on program) do not use it. Many of them are quite expensive, but worth it in the long run.
What type of company will you be starting a real estate, a DEALERSHIP (assignments, rehab/retail, land development/resell) or INVESTING FIRM (buy and hold, get cash flow)? Dealership form Corp, (S or C depends on your projected revenues and sales and on you). LLC (state based, recommend not buying an aged LLC, not always necessary unless you intend on being taxed as a Corp) better for investing long term.
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