Can Equity within an LLC be used for personal Debt?

[Jent Botterman]

Hi All,

This question is multi-faceted. So, I apologize in advance for the barrage of questions.

I have a SFH, free and clear, that rents for $1,200/month. It has never been vacant. Before the interest rates make another jump, I want to do something productive with the equity in the house.

My initial thought was to use the equity to expand my portfolio and also upgrade some features on the current house. I also want to put the property into an LLC, but I've recently considered using the equity to pay off some personal Debt.

Regardless of what I do with the equity, my first question is whether a HELOC or an equity loan would be the best option?

What are the pros and cons of using a HELOC or equity loan?

If I put the house into an LLC, will I be able to refinance or get a HELOC right away? Will this help me build business credit?

If I put the house into an LLC, will I be able to use the equity (from a HELOC or equity loan) to pay off personal debt, or would that be considered taxable personal income?

I really appreciate any help you can provide,

A Puzzled Young Entrepreneur