LLC and Commercial Loan?

[Brian Garrett]

I've read how people create an LLC for their REI adventures and secure commercial loans versus getting conventional loans under their personal names. To my understanding the commercial loans closer quicker and are an easier process overall with an average interest rate of about 5%. My question is can I set up a new LLC and still secure a commercial loan or does the LLC have to already have a proven track record and established credit history? It seems that I can't go the conventional loan route under my personal name because I have no W2 income since I was self employed for the last 10 years and I have been transitioning out of those business endeavors for the last 2 years therefore I have no real income to show. If I can't go the LLC and commercial loan route then what are my options? I guess it would have to be either cash buys, HML's or private money at that point? I appreciate your input and advice. Thanks in advance!

[Bryan O.]

@Brian Garrett brought up a good point regarding timelines. Many of the lenders I have spoken with require 12 months "seasoning" of the loan. Some do not. If you do less than 6 months, you may well find you've shot yourself in the foot because the appraiser may use the house you are refinancing as a comp!

Using a credit partner allows you to get a deal you couldn't otherwise. This begins your track record and starts putting income on paper. If you've spent the past number of years getting rid of (or hiding) your income streams, what do you expect? When you talk to the bank, offer to put a load of cash into escrow with them as security for the loan... I turn down tenants in a C+ neighborhood that have plenty of cash. Why? Because cash can get spent instantly. Without a source to replenish it, they don't even get to rent my $1k/month unit.

FHA will require your income the same as all of the conventional mortgages will.

Best of luck.