Posted by Kevin Compton on April 13, 2004 at 07:10:17:
Charley,
A friend and I are in the same situation. As it was explained to us, a loan made in the LLC’s name will be a commercial loan when sold to the secondary market. The commercial loan will carry higher rates and have different terms (e.g. no such thing as a 30 yr. fixed for commercial loans). I would recommend talking to a mortgage banker about your options.
LLC formation reducing borrowing capability? - Posted by Charley Menendez
Posted by Charley Menendez on April 13, 2004 at 05:38:07:
I have a question for anyone who has formed an LLC in your real estate investing. I am being told that my borrowing capability may be reduced if I have an LLC in place. Is this true? My credit is great, so I am unclear as to why it would reduce my ability to borrow for investment purposes. I have read in multiple locations where this is the proper channel to go down and that it is beneficial to form an LLC for various reasons. Can anyone provide advice for a beginning investor?
Re: LLC formation reducing borrowing capability? - Posted by phil fernandez
Posted by phil fernandez on April 13, 2004 at 09:07:16:
Even when buying with your LLC, the bank will want you to personally sign for the mortgage and be personally liable. Not a big deal.