Starting and LLC and Credit to Purchase Real Estate
Hi Everyone,
I am in the process of looking for my first deal. I am considering starting an LLC with my partner but I wasn't sure how credit to finance these deals works. Will I be able to finance deals without any sort of credit history in the business? Will they consider the credit history of my partner and myself? Please let me know your thoughts and experiences.
Thanks,
Most Popular Reply
Hey @Clay Gregord the bank will use your, and your partner's, credit to approve the loan. Also, my experience is that you will have to sign a personal guaranty for the loans so the LLC won't shield you from personal liability for the mortgage. However, the LLC will protect you from other potential liabilities.
There is an ongoing debate on the utility of LLCs but I would suggest that you get a business umbrella policy to cover any claims that would not be handled by your property insurance. I think my policy is $1M for $325/year.