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Tips for investment property owners?


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I'm fairly new to the real estate investment business and would like to continue, but my credit is starting to get in the way.

I now have 3 apartment building + my personal residence. Here is the problem. I now also have 3 mortgages, 2 HELOCs, 5 accounts with the electric utility, 3 accounts with the gas utility, an auto loan for a used truck, and some credit card debt that accumulated while I was rehabbing the properties. Naturally, all the inquiries that accompany such transactions are there too.

Seven months prior to buying my first investment building, I formed both an LLC and LP. I've been told repeatedly by lendors and utility companies that I can't put credit items in the LLC or LP's name and they'd still show on my personal credit report anyway even if I did.

The goal here is to get all of the business mortgages/HELOCs, utilities, credit cards, and truck loan onto some sort of business credit report and off my personal credit.

I have one delinquent account with the gas utilities that I'm attempting to pay to delete. The error was purely clerical in nature and I thought the issue was already resolved <tenant didn't forward me the bill in time>. But I'm an honest man and pay my debts when they are my debts.

The LLC/LP will be two years old in May '07. I've had checking accounts in the LLC/LP's name since May '05.

Any help would be appreciated as I'd like to buy more building in the near future.

Thank you.


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You certainly should talk this over with a local attorney (with that much property, you'll need one eventually), but...

I'm sure you CAN put such things in your company's name. There may be some variations because its an LLC or LP, but I know for a fact that a C Corp can indeed have its own credit. The problem is that most lenders don't want to be bothered with the small fry...so...until your company does several 10's of millions in business, they're going to insist on a "personal gurantee" for any credit they extend the company. In effect, that means you're on the hook should the company ever default.

It's also going to be very difficult to transfer existing debt to the company. You'll have to negotiate new debt in the company's name, and then have the company pay you to pay off your personal debts. You need a lawyer and/or accountant to help you through all that...

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