What are the Pros and Cons of adding a partner to my LLC?.

[Shane Ward]

My son graduated college last year with his MBA and had 20k he wanted to invest. I was full on with learning a lot of strategies to use at that time so I opened an LLC, took out a HML for two properties to BRRRR and a HELOC on my primary to buy a third property to also BRRRR. my son put in his 20k for rehabbing the one property. Now we are ready to refi out of all three and my credit score took dump because of credit utilization ( I'm at just over 610 on the Experian site 90% utilization). Could or should I add my son to the LLC as a partner to use his credit score (740) to pull our cash out?

[Basit Siddiqi]

@Shane Ward

You want to consult with a couple lenders about adding your son before going on to Add him to the LLC.

Portfolio lenders do not go based on the rules of Fannie/Freddie. They mostly follow their own rules or rules of the firm that purchases the mortgages/loans on the secondary market.

With that said, many lenders will require that all "managing members" or "General Partners" have credit scores that are above company standards.

You won't know without calling a couple banks. It would suck to add him and you still can't do a cash-out refinance.