Depressing News

[Jason Peters]

I'm about a week away from forming an LLC for the purpose of flipping when I just got off the phone with the Vice President of a prominent bank in my area.

Apparently she received numerous communications today that lending to LLC's is next to impossible now with all the headaches coming from Fannie, Freddie, and FHA. They are worried about property value, length of ownership, and more properties going into the red. She said this will definitely affect banks and severely affect mortgage brokers. Of course this is devastating and depressing news for someone just a week away from starting in this business.

Do you guys have any advice? I'm at a loss right now... :cry:

edit: I would need 100% financing as of now FYI

[Richard Warren]

Don’t be so depressed. No bank is going to lend to a new LLC anyway. You need to establish credit for the LLC and most banks will require a MINIMUM of 2 years credit history.

So form your LLC and get a tax ID number from the IRS. Then go to Office Depot or a similar office supply store. They’ll probably give you a $250 credit line that you can use for supplies. Using it will be reported on your LLC’s credit report and help you get established. Next you can go to Lowe’s and Home Depot and get cards there as well. Your credit line will be small unless you offer a personal guarantee but they will gradually increase over time. Use these cards to make some small purchase as well. Make all of your payments on time and you will have a track record by the time your LLC is old enough to be considered by the banks.

In the meantime you can get loans in your own name or use private money and seller financing to make your deals.

:cool: