Legal Question in Real Estate Law in California

Re: real estate

As I understand your question, you're asking about penalties on a loan that you would take out to use as part of the purchase money on this investment property.

Then, if you mean a prepayment penalty for paying off the loan early when you resell the property, hopefully for a nice profit after fixing it up, I'd point out two things: First, prepayment penalties are a highly variable loan feature, and the length of time you have to pay on the loan before you can pay it off without penalty can vary from no time at all to a fairly large number of years. Second, many times the prepayment penalty only applies to a refi, not to the payoff resulting from a bona fide sale.

On the other hand, I should caution you that there may be other penalties of sorts for the unwary or dishonest borrower. For example, if your loan application states that you will be an owner-occupant and it's really just an investment, you could be subject to claims of fraud.

If your company is a sole proprietorship, buying a property through your company is legally almost the same as buying it in your own name, because the company is you for most legal purposes. Because there is no legal advantage, I would recommend not confusing the public record by placing title in a fictitious business name or any name other than that of a real person. You can still keep separate books or run it through the company's books, if you want.

A lot of investors who buy investment properties set up LLCs to buy and hold those properties, especially if they are going to rent them out. This provides a measure of insulation from personal liability.