Need to add co-signer to LLC as a member to make him eligible
A year ago, I purchased two Four plex with the plan of improving and refinancing within a year time period. More or less the BRRRR strategy. Of course there have been all of the unexpected learning experiences from this venture, and as I foresaw, there is one final challenge.
Since I originally purchased the properties, my credit has gone from 710-595 due to pretty much going all out in the real estate industry and just doing as much as I can, as fast as I can, and until recently it was working out pretty well.
My hard money lender will refinance my properties with a 7.775 cash out interest only loan (unfortunately a 3 year lock in with a prepayment penalty something along the lines of 3,2,1, each year. Over all with my score at the moment I'm fairly happy with the interest rate.
They brought up that if I had a co-signer that they could lower the interest to 7.375, so I decided to bring my father in on the loan, but because my credit didn't qualify alone for their program, the problem is they want him as a member on the LLC.
As of now, I am the only member, and with this change I am concerned for the following:
-How can this affect my taxes, and business?
-Does this truly have to be permanent, or can I just add him and then remove him after approved and eat the cost?
-Can being a member in the LLC negatively affect him?
-Am I able to put him as .01 percent owner or less with no pay outs or are there minimum requirements? He is not looking to get any income from this at the moment.
-Any important points that I'm missing would be greatly appreciated.
I hope I explained clearly.
Thank you all for your expertise.
