Financing Options with an LLC?

Question

Hi BP Community - I have another question.

My plan has been to start an LLC, and purchase a duplex using traditional financing with 20% down. I spoke to a lender yesterday who told me I cannot do traditional financing in an LLC, and no one will give a business loan to a new LLC. This is not quite in line with other stories I have heard, so my questions are as follows:

1.) What are my financing options when holding a property in an LLC?

2.) How important is an LLC when starting out? I own several personal assets and have a family so I absolutely want to protect against risk.

I'm sure I missed some information that may help answer these questions, and am happy to provide additional information. Thanks so much for the advice/personal stories.

Jenna

Michael Garofalo · Answer

@Jenna Harris, you're most welcome. Best of luck, and feel free to PM me if you have more specific follow-up questions or details to share.

Jenna Harris · Answer

Thanks Michael, I appreciate your response here and in the linked discussion. I will definitely call around a couple smaller banks in the state I am planning to invest in. Thanks so much.

Michael Garofalo · Answer

Hi Jenna,

I posted a reply to a similar question a while back, and others chimed in with some valuable input. Checkout the thread here: https://www.biggerpockets.com/forums/49/topics/566...

In a nutshell, yes I believe you should absolutely create an LLC for asset protection. You can get commercial financing on your LLC, the terms just won't be as favorable as traditional financing and you can request attaching what's called a "personal guarantee" to the note if the business is just starting out.