Who gets better lending? an LLC or two individuals

Question

Hey yall! I am looking to make my first deal and I was wondering how to get the best deal when looking for funding. Please poke as many holes in this plan, but having just graduated college and having no money, I am turning to a HML for the down payment (20%) of the loan. The rest will be through a traditional mortgage bank.

Given the above knowledge, would I get a better deal for the HML and the Mortgage through an LLC or putting it in my name and transferring it to the LLC once some time passes?

Kayla Elliott · Answer

@Ali Worthen that would be very much appreciated if only to pick their brain. I am looking to gather as much information before I go to a lender as to not be taken advantage of in the process.

Tom G. that would be a great way to mediate my fear (above ^)! Thanks for the recommendation.

Kayla Elliott · Answer

No that's great information thank you! If I may ask, how do you get funding for your endeavors? I'm looking to hit the ground running but I don't have capital to play with. Looking for any creative ideas!

Robert Spencer · Answer

There is a lot to this, and things may be different in California.   I've had a hard time getting funding as an LLC.   I've gone to all of the banks, credit unions, etc in my area.  What they all tell me is one or more of the following:

-"we don't do mortgages for LLC's"

-"we don't do HELOC for LLCs"

-"we don't include rental income as part of your income in our formulas"

When I talk to the business loan department:

-"we don't use residential properties as collateral"

-"we also require 20% (or 30%) down"

All that said, I'm hesitant to buy a property in my name and then transfer it to my LLC, because my lawyer said that an LLC is only as good as your ability to show that it is, in fact, a separate entity.  So, if you were to get sued, if the oppsing lawyer can show that you regularly blur the lines between you and the you that is owner of your company, they may be able to convince a judge to pierce the veil of separation that LLCs are meant to provide.

Sorry, I don't know about the numbers between those options you mentioned.  I just wanted to give you the other points to consider.

Who gets better lending? an LLC or two individuals

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