LLC or Partnership

Financing, Hard Money Lenders, Private Money
1

I have a few questions regarding financing use either LLC or Partnership.

If I apply loan using partnership, whose name is on the loan doc, partnership or general partner? As a general partner, will my credit report include this loan amount?

If we set up a new LLC, for the purpose of buying rental property. How difficult is it to apply a investment loan in LLC’s name. Both owners of LLC have credit score over 700, and we are intend to put down 10% to 20% money.

2

I’m not aware of any company that closes residential properties in the name of an LLC. I do work for a direct lender and could easily be wrong, but my company requires one of the partners or both partners to purchase or refi the property as private individuals.

If anyone knows of someone that allows an LLC to sign the loan docs then please let me know. I’m always willing to learn.

3

Mark,

Thanks for your reply.

I maybe ask the wrong questions. Currently I have three single rental properties. I like to buy up to 5 single residential houses for rental this year. If I purchase all five under my name, what happen to my credit score?

From a long tem perspective, I like to put all rental properties under either partnership or LLC entity. I would like to know for people who own many single properties, how did they acqire these properties (by individual, LLC, partnership?)

4

The investors I have worked with in the past have all purchased their properties in their names. Some of their properties were purchased by their partners and some in their wife’s name. But all were purchased by individuals. They may have later transferred title to an LLC, but for the loan purposes they closed in their names.

Your credit will react however it will react. Most likely it will take an immediate dip, but should recover after a few timely payments. If you’ve always been on time with all your payments then you shouldn’t worry too much about your score dropping. One of my clients had 100 current mortgages on his report (yes 100) and his FICO remained at 680 because of his perfect history. Make sure you find one lender and stick with them as you don’t want your credit run several times. Most lenders, like myself, can run 1 report and use that single report for 60 days.

I hope this answered your questions.

5

Novak,

Bank of America will allow you to purchase under a closely held corp.(their verbage, not mine), however the stickler is that they will only do it for jumbo loans.

6

Thanks Mark, very helpful!!!

I appreciate it very much. I will start looking for more proepperties this year, and good luck to everyone for 2006.

7

Chris,

Thanks for your information!