I don't have very good credit, but recently I sold my house and have a little over 200k in the bank. Starting to build my credit, but its not good enough for what I want. I'm looking to invest in an apartment complex or any good passive income real estate. My question is this: can an aged LLC with credit help me in acquiring financing for an apartment complex when having 200k for down payment? The reason I ask this is, credit takes time to build, and I have the money now to invest. Any clarification is appreciated.
I think I am confused. You have 200k in the bank, your credit is bad how? I mean foreclosure, bankruptcy, bad debts? If you want to invest in a multi-plex what is stopping you.
With $200,000.00you should be able to do any commercial property up to 500,000 at least that would be an LTV of 60/40. No matter what your credit (at least that is what i have seen) is that loan should walk no problem.
I would be interested in getting more information to help you better.
@Juve Madriz The aged LLC will not help you that much. You (or a loan guarantor) will still need to personally guarantee the loan. Credit score is one of the factors that your lender will look at, although it won't be as important as in residential lending.
Keep building your credit!
@Michele B. - The reason i have bad credit is because of long time medical bills, and I bought the house last year from the owner who was losing it due to taxes. I paid it cash over 10 months, did not go thru bank. That's the reason I have money, but my credit score is low. 520 as of this week. It will go up now that my debt is taken care of. What I had in mind was buying an apartment complex of over 500k, putting the 200k as 20-25% down payment so I could get a higher price/quality deal. If I wait til my credit score goes up, using credit cards and paying them in full every month, could I get to the point in the near future that I could use the 200k for 20-25% down, therefore getting a higher price investment?
Thanks for the info @Omar Khan
Echoing @Michele B.
It's my understanding that commercial loan eligibility is assessed based on the debt service coverage ratio, LTV, and your previous experience investing in/managing similar properties. If the LLC in question has property development/management experience, then it should absolutely help in obtaining a commercial loan in combination with your ability to provide equity.
Perhaps there are commercial mortgage brokers in the forum that could weigh in on this?
aged LLC won't help much. business credit does not build the same as personal credit
additionally, unless you partner up with a large apartment complex as a passive investor, you'll be buying a loan that requires a personal guarantee, which means your credit will be a factor.
the bigger complex you buy, the less this matters, but if your experience is low and you're the deal principle then you'll have to prove your track record.....which is your credit score.
yeah, good credit takes time. That's why it's so valuable!! there are ways around credit checks, but you pay an even higher premium to do so.
best bet imo is to partner with someone as a passive investor while you learn comm real estate and boost your credit score.
@Alexander Felice Thanks for the info. I think I will build my credit first, and in the mean time I'll network to see if I can find a passive investor to partner up with and buy a bigger deal together. I definitely need to just relax and figure out the right move. Thanks again.