LLC with commercial mortgage VS personal regular mortgage

[Neerav Patel]

I just bought REO property as my own residence and renovated it inside out(which is almost done).

Now I am planning on my next investment but I have trouble deciding path for finance.

On one end I can get an HELOC on my primary residence and use my savings and HELOC(if needed) as a down payment for next property and buy it under my personal name with 4.75%ish interest rate and 30 year term. (and FYI I know many lenders will not do HELOC this soon , but my local bank that I use is willing to work with me on that). Which also leaves me from using LLC protection but many lenders also give 85% LTV which is a nice plus and they are easier to get.

On other side, I can create an LLC and use my savings and HELOC (if needed) as my capital and fund deal for next investment property. My bank's commerical department does 75% LTV and they also do renovation part as 75%. But of course closing cost are higher and they offer 5 year 5% fix rate and 15 year variable, which I believe is standard. In this way I can use LLC protection but interest and terms are not as favorable as buying under my personal name. Plus 20 year term also reduces cash flow which is more important for me then little faster payment with small term.

Should I go any of above way for reasons I mentioned above or something that I miss ? Is there any other way that deal can be structured that I don't know about?

Thank you all for your time and effort. 

[Carl Dowdy]

I find the 30 year fixed interest rate to be more advantageous than the protection that an LLC might offer. In Colorado, premises liability extends beyond the property owner to also include a "person legally responsible for the condition of real property". In Colorado, if you're self managing, you've got to look more closely at the legal analysis than simply how title is held. I suspect it's similar in many other states, but I can't say.

Delayed financing exception is nice if all requirements are met.  Have used it a bunch.  They do require the "cash" used to purchased the property with to be sourced, so you have to prepared to pay it back to where it came from.  This can be an issue if the "cash" came from another cash-out financing, since in that case you do not want to have to pay down the 30 year loan you just obtained a few months prior on a different property.  Learned that one the hard way.