How does running an LLC affect your financing situation?

Question

For example, Ive heard you cant get a HELOC if you have the property in an LLC. Ive also heard you'll pretty much have to put a 20% downpayment for a conventional loan. Are these true? And how else can owning an LLC affect your financial decisions, baring the obvious asset protection? Could the LLC still get unsecured LOC? Id like to run all my future rentals under LLC's so its important i figure this stuff out. Thank you!

Jason D. · Answer

@Devlin Melvin you can get a HELOC on a property in an LLC. They arent as common but they are available. Downpayments are going to be 20% and up, just like a residential loan.

The downside is that the interest rates are about 1% higher than residential.

If done correctly, and LLC will protect you and your personal assets from liability.

Christopher Phillips · Answer

@Devlin Melvin

HELOC are for primary residences. Banks won't do them for investment properties in an LLC.

LLCs are corporation. If you have a property in a corporation, you'll have to get a commercial loan with 25% to 30% down.

Some people will get a multi family property in their name with traditional financing and eventually transfer it to an LLC. But that will prevent you from getting a HELOC down the road.

LLCs don't protect assets. They only protect your personal assets from creditors if the business fails. It doesn't protect you from lawsuits. That's what insurance is for.