LLC Credit

[Jamar Arbelo]

Has anyone ever obtained financing in a business name (LLC) without using their own personal credit? Do you know of anyone who lends lines of credit to businesses without personal guarantees?

[Jeff Takle]

1) You can rent them out. When you go for your next mortgage, the bank will count 75% of that income against your debt-to-imcome ratio. If you're able to get rents at 125% mortgage 9PITI really) then you are more or less zeroed out.

2) Seller financing. Buy a place, fix it up a bit, then do seller financing. You still hold the deed as the mortgagee, but then again you don't really own the property then either.

3) Find funding from secondary lenders/funny money. See the alternative financing forums in the index of this site.

4) Build up your equity and/or 1031 Exchange until you can buy a place with almost all cash or all cash. If you have that in an LLC, then I suppose it wouldn't hurt if you asked for more money.

I could be wrong but I don't know of any benefit in terms of getting a bank loan b/c your stuff is in an LLC. Banks aren't that sloppy generally--and, if you don't want to commit mortgage fraud, that's probably the deal.