Cash Out Loans for LLCs in Texas - Differences

3 Replies

Hey,

Had a question: What do you suppose lenders look for when performing cash out loans in Texas for an LLC?

As a sole proprietor, I've acquired 3 homes all cash, then performed a cash out so I'm pretty familiar with what a mortgage company expects in this situation.

How does it change for an LLC? Do they consider cash reserves (if so, any difference)? Salary for a key employee, in this case me (which means I'd have to pay myself a salary in my BP, not just commission). Do they take into account my other assets? Are they looking at my credit score, even though it's really a company that they're lending to.

Thank you!

-billy  

No bank will make a loan to an LLC as if the loan were to go south they have no recourse against an LLC. You can quit claim property into an LLC after you have purchased it.

Originally posted by @Curt Davis:

No bank will make a loan to an LLC as if the loan were to go south they have no recourse against an LLC. You can quit claim property into an LLC after you have purchased it.

Sorry, but that's not quite right. Banks can and do make loans to LLCs. But they will typically require a personal guarantee from one or more of the principals of the LLC.

Hi Jon, so what is included in the "personal guarantee"? I've done a little reading quit claims, and it seems pretty complicated. I'm planning to buy at the trustee sale, vest title in an LLC, seek cash out financing as an LLC.

-billy

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