I recently bought an inhabitable investment property and we bought it knowing that it needs some brick work and tuckpointing that will cost $12,000 to complete. Rather than building up the $1500 net profits every month, I'm thinking to just get a loan for the 12K and pay myself a bit less after deducting mortgage and construction loan payback. We have a new LLC that we are likely going to quitclaim the building into. How can I get the 12K loan for the brand spanking new LLC and not have to get one personally which would affect my DTI ratio and thus my ability at a new deal?
Hey @Chidi Osuji good question, I was recently in a situation where I was looking for funding for repairs. First, congrats on your new purchase, you have several options.
I'm not sure how credit and or loans work in your state, but in my state, even if we have an LLC/ Corp, recourse loans (most private, unsecured loans) must have a personal guarantor (me/you) attached to the loan. As a matter of course the lender will most definitely want a personal guarantee for a new business.
If it were me, I would first opt for a HELOC, especially if there is equity in the property. I would not rush to the deed the property to my LLC an strategy to insure I could get funding on my own private credit, we just wanna get the job done.
As @Justin Thompson already stated you can go with one of those companies that offer unsecured CC with 0% interest for 12mos', the downside is that they charge a fee, similar to points, like a hard $ lender.
Also, Home Depot and Lowes offer project loans. You could get the project loans and then balance transfer you debt to a business CC once you get your LLC established with a credit profile.
Wells Fargo also offers a, project/builder loan to rehab a property; however, the loan will have to be personally guaranteed by the borrower.
Keep us posted, hopefully you get better options that all that we know.