Can you roll a HELOC into an LLC?

[Mario B.]

Hi All!

My wife and I have a condo, we are thinking about leveraging our full HELOC for an investment, however we don't have kids yet and may need to buy a house soon. Can I buy an investment via HELOC then create an LLC and refi? I don't want to forfeit buying a home because finances are tied up in the investment. Or, would It be better to buy the house fist, then use the equity for the investment?

Thanks!

[Robert Carraway]

@Mario B.

True. The HELOC is easier to execute. But, it will have more of a negative impact on your credit score. Your credit score is impacted by credit utilization. So, if you have $100 of HELOC available, and you use all or most of it, then your score will go down. By obtaining another loan, you will increase your available credit, and your utilization will be less impacted. Seems counter-intuitive, but it's how credit scores work. I'm assuming that you'll still be on the hook for the loan linked to the LLC. If a bank will give your LLC a loan without a personal guarantee or link to your credit. You are right. But, I doubt you'll get much interest from the banks unless you put a large down payment into the deal to minimize their risk. Also, you'll pay a higher interest rate.