It shouldn’t make a difference what type of entity as long as it’s a single-purpose entity (so that everything owned by the entity would be fair game to be collateral for the loan). For example, you wouldn’t want this same entity to hold title to rental properties you were holding long-term, or to any other property that wasn’t intended to be collateral. But if everything the company owns is collateral for the loan it’s extremely simple to give the bank a recordable interest in the company’s assets.
I have started taking my business plan to some local banks. The lenders I have talked to seem to like what I am trying to do but they seem to have a problem with just providing an unsecured working line of credit. I have explained that the money would only be used to purchase properties for a quick flip or lease optioned for a year.
Is there any way to secure the loan with the properties that I am purchasing. The lender that I spoke to said that that he can not make a loan for property purchased in the future. Can I some how bout the Bank on the note so they can use that property as security. Thanks
One way you could do it would be to set up an entity (example, an LLC) whose sole purpose is to own property secured by the credit line. Then the bank could hold a security interest in the LLC itself along with assignment of rents and the like (could be placed in public records as a UCC filing), and thus would be indirectly collateralizing the property.