Starting new LLC to borrow money for commercial property

[Julian F.]

Hi, I'm Canadian.
I'm planning to start a new LLC in a state (possibly Nevada), so that i can use it as the entity to apply for a mortgage on a small apartment building (8-18 unit).

Can a brand new LLC with no credit or previous transactions qualify for a mortgage?

I was told that on a 1-4 unit residential, the lender considers your financial statement. On a 5+ unit commercial, the lender considers the businesses financial statement. Therefore, i think its possible.

Any experience with this?
Thanks.

[Account Closed]

As with most myths/legends there is a grain of truth in them.

Originally posted by Julian Ferreira:

Hi, I'm Canadian.
I'm planning to start a new LLC in a state (possibly Nevada), so that i can use it as the entity to apply for a mortgage on a small apartment building (8-18 unit).

Unless the apartment building is in Nevada, don't waste your time and money.

Yes, it does happen all the time, every business day.

But, and there is a really big one here, if this is your first commercial deal, it won't happen for you easily.

This is where everyone gets really confused.

Here are the facts. With a commercial business loan the lender is not looking to your income as a source to satisfy the loan. They absolutely will look at your credit to determine the likelihood you are able to run the business they are funding. Specifically, they will be looking to see examples of poor money management and examples where you did not pay obligations as agreed. So, if you have crappy credit, a commercial loan is not in your future. It doesn't matter if that business is new or old. And no, not even the "seasoned shelf corp" scam will overcome that, lenders will look at the financials of the owners unless and until you are publicly traded with a long history of audited financial reports.

This is a great big, "it depends" area.

Any experience with this?

Thanks.

Yes, over 24 years worth.