Insurance/Lenders don't jive with LLC's!!!

[sas]

Just joined the group.   Lot's of good info.  Looking forward to reading/participating.  Checked everything out before posting this.  Would appreciate any feedback.  

Just getting started.  Have a contract on 1st house.  I have a lot of start up activities going on right now.  The bottleneck in this process has been asset protection.  I am looking to set up a LLC; however, in doing so, have cut my cash flow down significantly.  Mortgage and insurance companies don't want to talk to me (as LLC).   Banks require large down payments at higher interest rates.  Because I can't extend my home owners insurance policy (as LLC) to my investment property, I am looking at paying 3 to 10 times as much for a policy.  Point being, my market for insurance and lenders has been cut 80 to 90% b/c of LLC.  Not much competition left.  Currently talking to independent agents and a couple corporate friendly banks.

I am very interested in the LLC because of long term prospects/ambitions; however, I am also very interested in cash flow.  

Any recommendations on how to achieve competitive insurance and loans as LLC???  Any advice would be appreciated.  Again, looking forward to participating with this forum.  

Thanks in advance,
Scott S.
Freeport, TX

[Admin]

Scott,
Yes, traditional lenders will need sufficient proof (personal sigs, pledged assets and/or really strong financials or project) to justify lending to an entity.  I don't have a ton of experience with that (some), but that's what I've seen.  You might try some of the smaller banks around and begin that relationship.

I've not seen the same issue with insurance companies.  I have insurance in entities, trusts, personal or some variation of all three.  As far as I know, it has not increased my cost at all.  The increase comes from being an investment property, not how it's owned.

Here's another thread where I listed a couple of the folks I frequently use...

http://www.texasrealestateclub.com/forums/phpBB2/viewtopic.php?t=117

hope it helps...

[Shaun Steckler]

I agree that building a relationship with a smaller, community bank is the way to go here.  Smaller banks usually do not have an issue with lending to a LLC.  You will however have to sign a personal guarantee - no way around this. 

Especially if you're just getting started. 

As far as insurance goes, look for a smaller, independent agent in your area that already insures investment property.  Finding someone to help you should not be that big of a deal.

[BLL]

You don't need an LLC if you are just starting out unless your net worth exceeds several million or you have partners. Don't bother with entities if it stifles your growth. You can go the LLC route when your cash flow can support it.