Creating an LLC and moving my condo and mortgage into it

[Jason Miller]

Hi,

I currently have a condo with a mortgage in my name. I want to move the property and the mortgage into an LLC. I know the interest rates may change (which I'm OK with) but I'm curious if this will still appear on my credit report. I'm going to rent out my current place soon and want to look at buying another condo on my personal credit. But I don't believe I'll get approved unless I can clear this mortgage off of my personal credit. Any advice would be GREATLY appreciated.

[Konstantin Ginzburg]

The route you are trying to go isn't likely to help you with your goal. An LLC is a limited liability company whose primary benefit is creating a separate business entity to shift legal liability too but from a tax and ownership perspective, it still functions similarly to a sole proprietorship where the the actual financial ownership falls on the owner or owners. The only business entity that is able to stand on its own as a completely separate entity is a corporation but those are more difficult to form and require adherence to a lot more rules and regulations. You can shift your mortgage from yourself to the LLC but the condo will show up on your personal credit report. By building an LLC with an established cash flow and its own credit history, you will eventually be able to borrow and finance through the LLC rather than through your personal name but that will usually require 2 years of established tax records and revenues. The primary advantage to this would be since financers who deal with commercial loans, lend to business entities so building up an LLC is a good route if you plan on getting into commercial properties in the future such as a large multifamily properties. As for your immediate concerns: if you have reached your current borrowing limit then you might need to begin viewing other forms of financing such as seller financing, partnerships, or private lending.