Business Credit as Down Payment.

Orlando, Florida
Creative Real Estate Financing
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Business Credit as Down Payment.

Zachary Roberts
Member since 2019 · 1 post · 0 votes

Hello BP community! Currently at 5 properties. Four from moving every year and one from putting 20% down for an investment loan. However, this process is feeling too slow using my own money. Has anyone here created an LLC and used business credit to purchase properties, or at least fund the down payment? I am good at spotting deals; I simply cannot afford the down payment and fund the renovations and was looking into using business credit. Thanks!

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Zachary Roberts:

    Hello BP community! Currently at 5 properties. Four from moving every year and one from putting 20% down for an investment loan. However, this process is feeling too slow using my own money. Has anyone here created an LLC and used business credit to purchase properties, or at least fund the down payment? I am good at spotting deals; I simply cannot afford the down payment and fund the renovations and was looking into using business credit. Thanks!


    You would be borrowing money to borrow money, which I don't recommend. Borrowing more than 80% can be overleveraged. It's absolutely possible to do, and it's possible to do it without crashing, but it's a house of cards. Even a very disciplined person can be caught by a market shift that brings it crashing down.

    Do you have equity in your properties? If so, get a line of credit. Use that to purchase the property, fix it up, rent it, then refinance it for the higher price. Use the cash from the refinance to pay of your line of credit. Rinse and repeat. After enough deals, you should eventually build up a pile of cash and the line of credit will no longer be needed.

    I only recommend borrowing from a line of credit or hard money lender if you know the balance can be paid off in less than one year.

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y
    Quote from @Zachary Roberts:

    I am good at spotting deals; I simply cannot afford the down payment and fund the renovations and was looking into using business credit. Thanks!

    Since typical LLCs are pass-through and essentially disregarded (especially SMLLCs) lenders aren't really bowled over impressed or eager to lend to an entity itself without personal guarantees.  

    Identifying deals is the toughest part. Form an LLC and bring in a money partner. Plenty of people looking for passive RE investment if you identify, acquire and operate it.

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    This is where you need to make the decision on flipping one per 2 you hold. You will quickly run out of money if you purely buy & hold. 

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  • Jack Mawer
    Lender · Member since 2022 · 338 posts · 374 votes
    3y

    There are definitely lenders out there that will let you use business credit to fund your down payment, good luck! 

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