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Question about property (land) and business

1,168 Views | 4 Replies | Last: 7 yr ago by histag10
Lunger
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S
Howdy Ags,

So I'm a fairly well-educated guy, but that education extends in no way towards business or real estate. As I get into my prime of life (ha), I'm considering starting a business with friend, specifically, owning rental properties. I have a lot to learn.

My first question is this: if I own a piece of land, but it was financed and I still owe money on it, can I transfer or sell this land to my business? If I were to sell it, I would want to sell it for pennies on the dollar to create equity in the company, and then just continue to make payments on the land as a personal expense. Is this possible?

Thanks!
Business Time
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AG
Read up on due on sale clause. If your loan has this feature (most do), you run the risk of the loan being called.
Copp
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FYI, most of the time when loans do get called as a result of the due on sale (this is very rare by the way), the lender usually sends a letter that says transfer title back to original owner or we may exercise our option foreclose.
histag10
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AG
Question- why not lease the land to your business, so the rent goes to pay the loan? Or even a lease with option where the rent payments go towards the sale price once your loan is paid off, or you are in a position to sell it to the company on the cheap?
Lunger
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S
I was hoping to use the land to gain equity in the company. Maybe there's a way to at least use the equity in the land to gain equity in the company?

Say it's a piece of land valued at $100k, and say I have $50k in equity. Can I transfer my equity in the land to the company and at least gain another $50k in equity in the company?
histag10
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AG
refinance it at 100k, you take the 50k in equity and put it into your new business to "buy" your shares in the company, then lease the land to the company with an option to buy, so the rent goes to pay your loan, but builds equity in the land for the company if they so choose to purchase it in the future (when the company has the money to at least pay what you owe, or that you can pay the difference). Then, if the company fails (hard to think about, I know), you will still at least own the property and not lose your equity in the land, the land itself, and your company.

Just a thought.
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