Hard Money to an LLC; Doe this make sense?

[Ken Dillard]

OK BP. Three partners and I have set up an LLC for fix and flips. We have been talking to a couple of hard money lenders who are more than happy to lend to LLCs. All seem to run the normal 90% of purchase and repairs up to 70-75% ARV and will take first position on the lien.

Here is the odd part to me. In order to execute the loan we have to personally guarantee the loan. That seems to defeat part of the purpose of the LLC. The lender out of Texas even said they only lend to LLCs but have to personally guarantee the loan.

Is this normal? Are there hard money lenders which simply loan to the LLC entity?

Thanks!

[Bob Green]

Very normal. What you are looking for is a non recourse loan, however don't expect 10% down payment and 75% ARV. More like 30% down payment and 60-65% max ARV. Lending is about risk versus reward.