LLC loans can be a hassle for business owners to secure. This is especially true for individuals looking to finance their rental property venture. As a hopeful rental property LLC owner, you need to know how to lock down a loan to finance your business. Running a limited liability company means that you have to go through certain channels and take certain steps to finance your projects. In this post we will cover the steps to secure LLC loans for your rental property.
Check Your Credit
When you begin requesting LLC loans for your rental property, banks and lending institutions you apply to will run your credit. In order to avoid any surprises, check your credit score and report before applying. Check your credit using one of the many credit services available online. While the information in self-run reports is not as detailed as what the bank has access to, you get a general idea of what you can request. Check your report to find out how high your score is and to see if you have any outstanding debt. Before you fill out applications for LLC loans, check your credit to discover how likely you are to get approval.
Establish Credit Lines
If you are fearful that your credit score limits your options for securing LLC loans for your rental property, establish credit lines that will grow with your business. Try to secure a line of credit that is correlated to your receivables as opposed to a static amount. List a paid-off property as an LLC asset to increase the funds granted to you. By establishing a credit line for your LLC, you begin to increase the overall credit score of the company. You could eventually fix your credit score. It is important to know that a line of credit is not the same a loan. A loan grants you a lump sum of cash that you pay back over time. A line of credit allows you to borrow what you need, pay that back, and then withdraw funds again. For LLC owners with credit too poor for a loan, establish a line of credit as a short term alternative to LLC loans for your rental property.
Compare Your Options
Before you make a commitment to a lender for LLC loans, compare the options you have. As you search, compare interest rates, late fee penalties, and collateral options. You have three types of institutions to go through to find a loan. These institutions are banks, online mortgage lenders, and lenders for investment business. Each comes with their own down payment, credit score, and cash reserve requirements. Most online mortgage lenders ask for a higher credit score than the other institutions, but demand lower cash reserves. Read up on each of the institutions and research the lenders listed for each before making a decision. Consider contacting the professional who performs your accounting for LLC for further insight. Comparing your options when looking for LLC loans is one of the most important steps because you need to ensure you are making the best choice.
Research Lender Requirements
Though it was just briefly mentioned, researching lender requirements is an important step in securing LLC loans. These requirements cover more than just your credit score and cash reserve. Many lending institutions will not grant you funds if you already have four mortgages out. Additionally, if you hold multiple rental properties with liens in them, banks and other lenders are unlikely to give you the capital you need. Before you apply, look up the specific requirements these institutions have. This will save you the time spent applying and waiting for a response on a loan you do not qualify for. To secure LLC loans for your rental property, research lender requirements to ensure you qualify.
Find Investor-Friendly Lenders
Once you know which financial institutions you qualify with, find investor-friendly lenders to secure LLC loans. While your first instinct may be to find a broker to find you a mortgage, many experts recommend that you find a direct lender. It is easier for you to find a lender who is willing to fund businesses like yours than it is for a broker. That is because a broker will have a pre-compiled list of potential lenders, none of whom may be interested in lending to you. This will take some additional work on your end to find that lender, but many professionals say this is the best way to. In order to secure LLC loans for your rental property, find an investor-friendly lender.
As an LLC owner working in the rental property industry, you need to know how to secure LLC loans. More so, you need to learn how to secure them without a good credit score. Start by running your own credit to determine what loans you can qualify for. If your credit score is not all that impressive, consider establishing a line of credit that will grow with your business. Compare your options and research lender requirements in order to find the best option for your situation. Finally, find an investor-friendly lender who has a history lending to businesses like yours. Follow these steps in order to secure LLC loans for your rental property.