Tax Liens & Hard Money/ Private Lenders
Hello All,
I have been running into a small issue and wanted to get some feed back to see if anyone new a way around this. I have a small tax lien that is against me personally. I will be paid off completely in the next few months, but this does not help me today. I know some hard money lenders/ private lenders will not lend to me until this is cleared up.
My question is if I am using and LLC. or Corp. to purchase the property will this issue still apply? If so, any suggestion to get around this would be greatly appreciated. (aside from the obvious of paying off the tax lien).... Thank you...
Bill,
If you use a corporate entity to purchase and are doing the purchase with private money, it most likely will not solve your problem. Most hard money lenders will require a personal guarantee and run the credit on the guarantor. If you are not borrowing funds it won't show up in a title search because the lien is not against the entity but only against you. Still, I would payoff the lien and make that your priority. Although for investing purposes it's not the best idea you can try to kill 2 birds with 1 stone if there is enough equity in property, you can borrow the additional funds and payoff the lien at the closing. This will give the hard money lender peace of mind that the lien is gone.
Thank you Frank, very helpful...
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#4 Private Lending & Conventional Mortgage Advice Contributor
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Don't generalize, don't assume, and don't judge yourself @Bill Newport. This is not a conventional loan. The whole idea behind a hard or private money loan is the asset behind the deal, not you. Some asset-based lenders might care about your credit but most won't, even though many might ask you to fill out a credit authorization. There are no rules about this.
A great deal and hopefully some experience, are generally much more important than your credit. With these, you should easily be able to find willing lenders.
Also, for reasons that have nothing to do with your credit, wise private and hard money lenders will prefer to loan to an LLC because it helps to confirm that the use of the money is for a business purpose. You weren't specific, so I'm assuming of course, that it is.
Jeff
Thank you Jeff....
@Bill Newport It will really depend on the deal, but as @Jeff S. said, I would think most would be lending on the deal unless you have significant assets.