I have put a signifigant amount of time and effort into forming my LLC and obtaining numerous BLOC. I have obtained these BLOC b/c as you all know that a successful REI needs to be able to act quickly when a deal arises and show strong offers in the form of cash. I was going to use the BLOC to purchases properties in my LLC’s name, but since this is my working capital I do not want to keep it tied up in one or two houses…I have to keep moving to the next deal.
HERE IS THE PROBLEM: When I go to put a mortgage on the property and free up my working capital my lender says that they will not lend money in my LLC’s name, even with a personal guarantee. Therefore this forces me to put title into my name (leaving me personally exposed) in order to get the mortgage. At that point I would then want to deed into a land trust with my LLC as beneficiary. Wow, this seems like a lot of extra work and money, plus the lender is forcing me to go behind their back to do this, which ethically, I do not like doing! Oh, and one more thing, I am trying to run my REI business as just that…a BUSINESS. All this swithing title back and forth makes it complicated to keep my books flowing the way I want to.
HERE IS MY QUESTIONS: What am I doing wrong here…there must be an easier way? Does anyone know of any lenders that will lend to my LLC if I give a personal guarantee?
I’ve spoken to a few lenders and none will let me put title in LLC’s name w/ personal guarantee. If you know of any that will do this would you please let me know who they are. By the way I am in Georgia.
Try Washington Mutual. I think they are still lending to LLCs, but they aren’t doing those no money down deals. Have you used a mortgage broker? They have access to many lenders.
I wouldn’t worry about personal liability too much. Your chances of needing the LLC is very small as long as you have good insurance. The other problem is that personally running your business is creating a path around the LLC to your personal assets.
You could try small local banks. What part of Georgia are you in. One of my best customers lives in Cumming, Ga and could probably recommend someone for you.
This is not something wholesale lenders that mortgage brokers use offer. It would be considered a commercial loan. 2 options:
Either get a commercial loan through a brick and mortar bank in the neighborhood where the property is located
or
Use a commercial lender that offers loans on residential investment properties. Not many of these. The one I know of will only do refinances. They have a 12 month seasoning guideline which can be waived if the property you are refinancing is owned free and clear (no liens) and the previous owner was on title for 18 months. So if you purchased a property with cash or available bloc it would be owned free and clear. If REO then you just need to know if the person who owned before was on title for at least 18 months.
If you can live with title just being done in your LLCs name with the loan in your personal name then several other options exist. One lender, WAMU, mentioned does this but they only do full doc investment loans. There are 2 others that can do with reduced doc benefits.