Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Buying & Selling Real Estate
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 6 years ago,

User Stats

6
Posts
2
Votes
Tran Chau
2
Votes |
6
Posts

Guaranteeing an LLC for an Apartment Purchase

Tran Chau
Posted

Hi all! 

I'm currently looking at an apartment building where the purchase price is around $1.25m. If all goes well, the plan is to purchase the property through an LLC.

I spoke with a commercial lender the other day and he asked for some paperwork to start the process. He then mentioned the bank would ask for a personal guarantee on the loan even though the property will be held by an LLC (with the building and land as collateral). I have a couple of questions.

1. I was under the impression that posting the property as collateral was enough, but from reading the forums, it seems to be typical on loans <$1m for banks to ask for this personal guarantee. Does anyone have experience purchasing an apartment around this price point and only using the property as collateral? 

2. The attractiveness of the LLC to me is for tail risks - for example, if someone slips in the rain in front of the building and becomes paralyzed, then your potential loss from a lawsuit is limited to the value of the property. If you provide a personal guarantee for the loan, does the personal guarantee then essentially remove the limited liability benefit? If so, is there a way to structure this scenario optimally?

I understand that a lawyer will have to comment at the end of the day, but I was hoping to get some initial feedback to start. 

Thanks for reading!  

Loading replies...