Registering 2 rental properties under an LLC to get a collateral on the LLC

[ffarouqi]

I am on the look out to know if I can register an LLC and have my 2 rental properties under the LLC so I can get a collateral from the bank on the LLC.

State: IL
City: Aurora
Zip: 60504

 

[quincy]

You can use your rental properties as collateral on a loan ... if that is your question.

 

[ffarouqi]

You can use your rental properties as collateral on a loan ... if that is your question.

Can I have it registered under the name of the LLC? What difference it would make if I take a collateral loan with properties under my name or if the property is under the LLC.

 

[Taxing Matters]

I am on the look out to know if I can register an LLC and have my 2 rental properties under the LLC so I can get a collateral from the bank on the LLC.

You certainly may put the rental properties in your LLC, and there is no law preventing a lender from lending to your LLC and using the properties the LLC owns as collateral. You just need to find lenders willing to do it. And generally speaking, those lenders who are willing will still require a personal guarantee from you on the loans.

 

[quincy]

What will be the purpose of your LLC?

 

[ffarouqi]

You certainly may put the rental properties in your LLC, and there is no law preventing a lender from lending to your LLC and using the properties the LLC owns as collateral. You just need to find lenders willing to do it. And generally speaking, those lenders who are willing will still require a personal guarantee from you on the loans.

I need to basically take a collateral loan from the bank on the existing properties but I am thinking it would be best to form an LLC although I am not sure what benefit it would derive...will it help me if I am not able to pay off my loan or file for bankruptcy?

 

[ffarouqi]

What will be the purpose of your LLC?

I am not particularly sure but someone suggested me to register an LLC, add these 2 rental properties under the LLC and then take a collateral against the 2 properties on the LLC...not sure if that would help me achieve anything as they obviously would still need a guarantor. LLC is a virtual entity...so even if I am unable to pay off the loan will the LLC be of any help so the bank don't hold me responsible.

 

[LdiJ]

I need to basically take a collateral loan from the bank on the existing properties but I am thinking it would be best to form an LLC although I am not sure what benefit it would derive...will it help me if I am not able to pay off my loan or file for bankruptcy?

No, because its almost guaranteed that the bank will require you give a personal guarantee.

 

[ffarouqi]

No, because its almost guaranteed that the bank will require you give a personal guarantee.

Basically, is there any benefit of going with an LLC thing then? Thanks for your quick response

 

[Zigner]

I need to basically take a collateral loan from the bank on the existing properties but I am thinking it would be best to form an LLC although I am not sure what benefit it would derive...will it help me if I am not able to pay off my loan or file for bankruptcy?

No, the LLC won't shield you from your financial troubles.

 

[quincy]

If you need money, you can try to get a personal loan using your rental properties as collateral. If you don’t pay on your loan, however, you risk losing your properties.

If you are having financial problems, have you thought of selling one of your properties, or is there not enough equity in either of the properties to make a sale worthwhile?

What is your end goal?

 

[LdiJ]

Basically, is there any benefit of going with an LLC thing then? Thanks for your quick response

Not for you purposes you are looking for.

 

[quincy]

If you currently have mortgages on your rental properties, and depending on facts, getting an equity loan might be possible.

Again, though, you need to be able to show a lender that you can repay the loan.

 

[adjusterjack]

Basically, is there any benefit of going with an LLC thing then?

Probably not.

For one thing, you don't

add these 2 rental properties under the LLC

You convey ownership of the properties to the LLC by executing and recording a deed so that the LLC is the recorded owner of the property. The lender then makes the loan to the LLC and likely requires you to personally guarantee the loan. The LLC is not the collateral for the loan, the properties are. If you don't pay and file bankruptcy, the lender gets the properties in foreclosure.

 

[TigerD]

No, because its almost guaranteed that the bank will require you give a personal guarantee.

Not necessarily. Non-recourse loans are done all the time.