Does anyone have experience with opening an LLC to acquire business credit & use it to invest?
I assume you are asking about real estate investment... duh... Unless your LLC is making a healthly profit somehow and would have a decent credit history, I don't believe this works very well. For real estate, the lenders are going to have you sign a personal guarantee anyway. The LLC, as a legal entity, is really only good for asset protection albeit with a cost. For certain activities (e.g. wholesaling, maybe flipping) it can provide some "legitimacy" as well since its a "business" doing the transactions instead of just a person.
@David M. I've been told that your ￼Business does not actually have to be accumulating profit in order to apply for business credit. Also shortly after opening your LLC it's possible to apply for beginner business credit cards such as gas, Walmart, target, etc to establish yourself. I don't believe you are required to sign a personal guarantee that's the whole idea of separating yourself from your business it might be a little bit more difficult but I believe it is possible.￼
Oh, for business credit you just need to claim that you have income or expected income. But, when you go for a mortgage you will be asked for a personal guarantee. Unless the LLC has some significant assets and/or income, the lender has nothing to support giving you the loan, albeit a commercial loan. So, the mortgage will hit your personal credit and you will have to show personal income.
Its two different situations. You can try to establish a business credit history, but it doesn't help much for mortgages. There are many stories / examples of people with long established LLC's who still have to provide personal guarantees for mortgages (real estate loans, not business credit cards...). If you didn't have to, that'd be great too...
@David M. This is the thing though I don't want to apply for a mortgage I want to be able to use my lines of credit as a means to make down payments are you know even buy smaller homes for 20-40k. I hear that credit through business has better terms/interest rates as opposed to Personal. Then go and cash out refi to get the money to pay back The amount I used. Have you ever done anything like this? I see it as a way to borrow from myself without having to go through PML or HML￼
What you are saying is absolutely possible and a way to leverage your LLCs; by acquiring lines of credit in the LLCs and using those funds for purchase, repairs, gap funding in combination with hard or private money, advertising expenses, or any other business related expense. I have helped several investors acquire these lines and then teach them ways to leverage them. They are good for short term strategy as opposed to long term hold.
@Greg Davis I thought so. If you have the time I’d love to get some insight from you.
I’m happy to talk and provide whatever insight or guidance I can.