I am a new investor with not-so-great credit. I am getting ready to incorporate to protect my personal assets and take advantage of tax benefits. I was wondering how incorporating will affect my ability to receive financing. I will only be dealing with multi-unit residential properties. I have several contacts that are possible money partners, but I would prefer to avoid that route if possible.
Will lenders (commercial and private) be more or less likely to loan money to a fledgling corporate entity with no fiscal history?
Will the same lenders perform credit checks on the manager/owner of this new entity (me)?
If I assemble a down payment using money for private investors, how much easier will it be to secure a commercial loan?
And finally, I have a very basic question about equity. If I have a multi-unit property with positive cash flow that was purchased using a mortgage that private investors paid the down payment for, then I refinance the property in two years for a $100,000 dollar increase, do I repay the investors their loan + interest with the equity and make the new mortgage payments with my cash flow? I know that’s a long question, but I am confused about where the money comes from to repay the investors. Obviously, if the rate of return is less than the downpayment percent of the mortgage, the money will not be available from the income to pay back the investors within a year.