Buying some land (need some advice)

[wap]

Our hunting club is looking at some land to buy. It just came up today and have not talked to a banker or lawyer yet. I was wanting some ideas from someone that has done this before, mainly about financing. We have a LLC already set up but would it be better for everyone to get their share of the money separetly or get a loan as a club?

[MemphisStockBroker]

I take it that the LLC will be the owner.
Since the LLC has no other assets, each one of you will be personally responsible for the loan.
This is common...

How many people are involved ?

You need to play the "what if" game, and answer a bunch of questions.

What if :

*One of the members gets divorced and the ex goes after the land
*One of the members wants to sell their share, who has first rights to buy it and how is it valued ?
*One of the members dies and leaves it to their kids and/or wife. Will that be ok ?
*One of the members goes bankrupt
*What happens when one of the members does not pay when the note is due ?

You need to have a formal buy-sell agreement that addresses most of these points. if you want to know more, contact me...

[WhiteRiverWill]

I am not actively involved in real estate right now but something that was beaten into our heads time and time again are the initials CYA. It stands for "Cover Your A_ _!" It is the best advice I can give.

[wap]

We have 7 guys but the LLC will be the owner. We have a set of bylaws already because we own our house but didn't have to finance anything. I guess my question would be is there any benefits of borrowing money as a LLC. Don't know what would be the best solution to say someone didn't have their money on time or wanted to be bought out?

[ltDangle]

No sure about land but I am in an LLC that is getting ready to buy a condo and the Rates were 1.5% to 2% higher. We ended up borrowing what we needed personally. Much better rate. If each of you borrow individually then what assest will you use? Something personal or the land itself. It really depends on the amount.

[Cotten]

There is no way in hell I would sign a note becoming personally liable with 7 people unless the note had language stating I would only be responsible for my prorated share of the loan; and I probably still would not do it then. MemphisStockBroker covered some of the reasons.

Four of us bought land a few years ago and everyone took care of his own funding. Some paid cash, some borrowed. Those that borrowed did so using their "ownership interest in the LLC" as collateral. And the bank provided a letter agreeing that in the event of foreclosure, the other LLC Members had first right of refusal on the Member in default's interest, helping protect us from getting a partner we do not want.

Last year I bought in to another club and they already owned the land. There are 24 other Members and how you pay for the stock share is up to you. And when you get in, you are not personally liable for any debt the club has. I was in one a few years ago with 12 other people that became very nastly. I can tell you for sure we were really glad not to be jointly liable on any bank loan(s).

So to your question "is there any benefits of borrowing money as a LLC?" The 100% answer is: "NONE worth signing your name to a note with 6 other people where you could be personally liable for their debt." Make everyone come up with his own money IMHO.

[BamaK9]

call your local Farm Credit or LAnd Bank office. Those boys are well accustomed to transactions like this and I've worked with several offices in MS on these type deals. They can steer you in the right direction.

[wap]

Thanks guys

[JMallard]

call your local Farm Credit or LAnd Bank office. Those boys are well accustomed to transactions like this and I've worked with several offices in MS on these type deals. They can steer you in the right direction.

This guy knows what he is talking about.
http://www.landbanksouth.com
JM