I am ready to move my properties into individual LCC's for asset protection. Looking for a local expert in Minneapolis that can walk me through the process.
Rental Property Investor · MN · Member since 2015 · 186 posts · 149 votes
6y
@Adam Sanders I'm not an attorney, but I'll share my experiences. First, if you have mortgage on those properties, moving from your name into an LLC might trigger a clause where mortgage company might ask you to pay off your loan. Mine didn't but you never know. Otherwise the process is pretty simple and the paperwork is called Quit Claim deed. To take it (asset protection) a step further, and your house is paid off, you can setup an LLC to be the "Bank", and create a promissory note between LLC that holds the property, and the LLC that's the bank, promising to pay x number of dollars, ie what you bought the house for. In case of a lawsuit that "Bank" LLC will need to be paid first. An attorney was helping me with that setup many years ago. One more thing, your insurance rate will go up significantly if the house is in LLC instead of your personal name. Good luck.
Rental Property Investor · Minneapolis, MN · Member since 2015 · 31 posts · 15 votes
6y
I'm also interested to see what others have to say. I understand that if you have a loan this gets interesting since you're technically breaking the terms of the lease. If you own outright I can't imagine its very complicated then.
Real Estate Agent · Saint Paul, MN · Member since 2015 · 224 posts · 214 votes
6y
@Adam Sanders I second @John Woodrich's comment and I will also PM you a title company that I highly recommend if you plan to purchase any more properties and switch them over to LLCs.
Rental Property Investor · MN · Member since 2015 · 186 posts · 149 votes
6y
@Adam Sanders I'm not an attorney, but I'll share my experiences. First, if you have mortgage on those properties, moving from your name into an LLC might trigger a clause where mortgage company might ask you to pay off your loan. Mine didn't but you never know. Otherwise the process is pretty simple and the paperwork is called Quit Claim deed. To take it (asset protection) a step further, and your house is paid off, you can setup an LLC to be the "Bank", and create a promissory note between LLC that holds the property, and the LLC that's the bank, promising to pay x number of dollars, ie what you bought the house for. In case of a lawsuit that "Bank" LLC will need to be paid first. An attorney was helping me with that setup many years ago. One more thing, your insurance rate will go up significantly if the house is in LLC instead of your personal name. Good luck.
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Adam Sanders If your loan is a Fannie Mae loan you can transfer the loan into an LLC, but not if it's owned by Freddie, FHA, VA, Conventional, or USDA. Most but all portfolio lenders will allow it, but I doubt you have a portfolio loan because you would likely already have the property in the name of an LLC.
Here is how you find out if your loan is Fannie Mae
Rental Property Investor · Alexandria, MN · Member since 2015 · 19 posts · 7 votes
6y
Great educational post. Lots of info and resources!! I bought my first SFH and I will be transferring eventually to my LLC. All is very important to know. Thanks for sharing the insurance info