Originally posted by @Dulce Beltran :
Hi BP! As I’m going through the process of purchasing a multi +5 units under an LLC and obtaining a mortgage, according to lender building qualifies for mortgage not myself and a personal guarantee would be needed. Worst case scenario, what happens if the property goes into foreclosure? Does my personal credit get dinged or the LLC gets the bad record in turn causing the LLC to go bankrupt? The LLC would be dissolved if it goes bankrupt right?
It all depends. If you are a guarantor on the loan, even if the loan is to the LLC, usually, language in the note says something like they MAY report your performance to the bureaus.
Key word personal guarantee ( personal liabilities for the debt ). This would make it a recourse loan to my understanding and you will be on the hook personally if things go south on the debt. You should be asking the lender these questions.
@Brett Goldsmith Thank you, I have asked these questions to one of the lender's I am vetting. I wanted to get BP's personal experience and which way you have structured your mortgages for Multifamily's using a commercial lender.
@Ron S Thank you, I will look for the wording in the lending docs!