Glendale, AZ · Member since 2017 · 1k+ posts · 238 votes
Hi guys,
I have a question for you...Ive been trying to transfer my 2 houses into 2 LLCs but really worried about due on sale clause. (If the bank finds out I transferred a house into an LLC the bank can make me pay all the mortgage balance within short period of time)
Couple of questions:
1) have you guys transferred your properties into LLC in the past while having mortgage not paid? Have you had any problems with your bank (lien holder)?
2) Did you have a title company do the transfer? Or how did you transfer? An attorney quoted me to do the transfer for 1K per house...
3) Do you have a business account for your LLC?
4) How do you collect your rent? Renters deposit it into your business account that holds your LLC?
5) Do you do any yearly meetings for your LLC or anything like that?
6) Do you have a trust holding your LLC or LLC holding trust? Or what is your structure?
I transfered title of the property with a warranty deed to a land trust that I was the beneficiary.
I then assigned the beneficial ownership to the LLC.
My lawyer, who is also my land trust trustee charged me under $400 for the Land trust and deed.
I created my LLC and used an operating agreement that I bought from an an asset protection firm.
The LLC has its own account and all rents and expenses eventually go through it.
However as I have multiple LLCs for different properties, I also have a C Corp as management entity that is under contract with all the LLCs. My tenants are dealing only with my C corp for the rent and lease.
All my LLC are owned by a WY holding LLC, that is owned by my living trust for estate planning.
I have annual meetings and board of directors meeting for my C corp.
I just discovered a way to partially address this issue that no one has ever mentioned to me. So shout out to my cpa for suggesting it.
Put your address as a P.O. box. Then you have no due on sale issues and you don’t get junk mail. Sure it won’t be a whole separate entity but that’s what good insurance is for
I just discovered a way to partially address this issue that no one has ever mentioned to me. So shout out to my cpa for suggesting it.
Put your address as a P.O. box. Then you have no due on sale issues and you don’t get junk mail. Sure it won’t be a whole separate entity but that’s what good insurance is for
This might work for some but unfortunately not my scenario. I need the LLC to be on the title so it can collect rent, pay utilities, deduct mortgage interest paid and be able to depreciate the home on its tax return so that all profits and losses can be evenly split between the two owners of the LLC (myself and my father).
@Mike S. Interesting strategy and seems to be what the Andersen Advisors suggest -- the WY holding company, with a C-Corp management entity, that enters into long-term leases with the LLCs. is that who you used?
@Noah M. I had them involved at one time in a part of my structure. But I am pretty much in line with the majority of their standard setup. I have also an offshore entity for some international investments but Anderson is not involved in any offshore structure. The management company is just contracted by eqch properties llc to act as the property manager for them.
The whole setup is probably a little bit heavy for my current situation but offers the flexibility I was looking for my futur projects. And i don’t mind the minutia of the corporate and companies paperwork, probably part of my OCD side :-)