I am trying to understand how the LLC works. I am trying to buy a condo for long term investment. I created an LLC to hold the property in. My question is regarding financing. The financing I’m using said I need to purchase the condo and deed it to the LLC. If I do this will the loan appear on my personal credit? How does this work? I already own two other properties I would like to avoid carrying all the loans on my personal credit or eventually I won’t be able to buy any more properties.
Thanks for the Help!
Yes, the loans will be on you personal credit. The banks aren’t going to loan to a recently-established entity with no credit history…you’ll probably need to start with some trade lines (try Lowes, Home Depot, Sears, etc…) and by making personal guarantees of payment.
Keith
How does that work if you make a personal guarantee? Is the loan in the name of the LLC?
finance to the LLC. the bank will make the loan based on YOUR ability to pay, and you will “cosign” the loan. doesn’t appear on your credit. builds credit for the LLC.
mark, this is what i’m talking about:
“I created an LLC to hold the property in.”
this statement epitomizes the mentality of my arguments.
i’m not saying that an LLC is not the way to go about running an rei business…or any other business for that matter - it’s GREAT.
but any business structure like this is not meant to be created to simply “hold property in”.
It’s just not right.
A LAND TRUST simply HOLDS TITLE to property. An LLC is a COMPANY that offers a service and/or product. The properties that the LLC acquires are simply assets of the business, that are paid for by the LLC and that hopefully, generate cash for the LLC.
Match,
I’m BY NO MEANS an expert on rei or business, but don’t look at your LLC as simply an “asset protection” vehicle. It’s much more than that and if it is used correctly - you will not have to personally co-sign for anything. If you treat it like a doing-business-as entity, then you’re missing out on the other benefits it has to offer.
sure in the beginning, you may have to personally guarantee a loan, but again, look at the benefits of MEMBERSHIP and see where that takes you.
If you have a solid business plan, with defined goals that move the business in the direction of growth - then you’re moving in the right direction. unfortunately, this is not easy to do when it comes to creating a real estate investment company. There’s no real service or product - of course there is, tenants and rentals - but unless you’re going to treat it like a business - developing systems, business property, operations, a good sound company name, then it’s not a business. And the problem with real estate is you may have a “customer base”, but it’s really a current “tenant-base”.
like, mark, i know you’re a CPA - he may or may not have partners already, but he probably has a system in place, customer-base, company name and he will be able to SELL his business someday OR hire someone else to run it for him. that’s a business.
mark, am i wrong?
nope. but my primary point (on this forum, at least) is:
DON’T OWN IT IN YOUR OWN NAME.
there’s just too much at stake. and for a beginning investor, it is still a sound strategy to protect yourself while you get started.
point taken.
I have asked the lender to put the loan in the name of the LLC and I would personnally Guarantee it. They said this could not be done I could only Quit Deed it after the purchase or refinance.
Does anyone know of a lender that will loan to an LLC?
Thank You!!
go to another bank. there’s more than one.
most will not give “your” LLC any money - because you have no history. if you know someone at a bank, and have rapport with them and they can influence any decisions, see them.
it’s funny, if the right people at a bank don’t know you or your business, they will not help you do a damn thing other than open a business checking/savings account, unless you’re putting some serious cash in a business account, or you have some serious cash in your accounts personally.