If you have recently set up an LLC or you are thinking about doing so for your investment properties, you’ll want to read this article. Here I focus specifically on how borrowing changes and what you need to know if you plan to borrow through your LLC.
If you are interested in other advantages as well as potential drawbacks of an LLC, I covered those in a previous article. Read it here.
Back to borrowing. When it comes to borrowing through an LLC, lenders look at and treat loans to LLCs a bit differently than they do to individuals.
The biggest difference when borrowing through an LLC is that you won’t be able to obtain government-backed loans (e.g., FHA, VA, etc.) to purchase investment properties. You still can get a loan through conventional lenders. Just be prepared to personally guarantee the loan and submit a lot of paperwork.
If going the conventional lender route doesn’t work for you, there are options. These include Commercial/Portfolio Lenders and Hard Money Lenders.