How to structure an LLC partnership
I have two rental properties that are owned with a business partner. We are wanting to transition these two properties into an LLC and are unsure about some of the specifics involved in doing so. We want to make sure we are fully protected.
We currently have an LLC established. The tenants make their checks payable to the LLC and we have a bank account set up in the LLC name. These 2 properties are currently owned under our personal names and have been rented for a several years now, we plan on holding these properties long term.
One of the houses is managed by a property management company and the other is managed by us (at some point will also be managed by a prop mgmt company). We do have a mortgage on one of the properties that is in our personal names.
Here is the list of items that we plan to transfer to the LLC but wanted to get your thoughts on what we may be missing or if this should be structured differently.
Things we think we need to do:
-We are registered for an LLC already without an EIN.
-File for an EIN under our LLC name (Must file a partnership tax return as this can not be treated as a disregarded entity like a single member LLC)
-Deeds (Quit Claim Deed the properties to the LLC. Should there be any worry about the due on sale clause with the one mortgaged property?)
-Property (file property transfer affidavit with city transferring to the LLC)
-Move Insurance under LLC
-Bank Accounts under LLC
-Property Management Company (Sign new agreement under LLC name and have payments from property management company direct deposited to LLC bank account)
-Any utilities that need to be transferred from tenants name during vacancies be transferred to LLC and not personal names)
We've also read about using a trust as well but don't know much about it so any opinions are welcome. If it comes down to it we will contact a lawyer but would like to see the opinions of some of the BP members as well.
Thanks for the help!