Updated over 9 years ago on . Most recent reply
Selling Personally Owned Investment Property to LLC
I have been working with a partner to purchase multiple SFRs through an LLC which we co-own, to be financed under a single commercial umbrella loan.
Basic structure being a 90/10 split on initial cash contributions; I manage every aspect of the property from aquisition, to improvements, to tenant managment; and then we have a 50/50 split of profits.
We currently have 1 property under contract, but are struggling to get the 4 we were hoping for. As such, I am considering selling some of my personally owned investment properties to the LLC. The idea being that I would recapture the equity I have in these properties and be able to "reload" my conventional mortgage limit one at a time as deals become available.
Has anyone done somehting like this? Sold their personally owned property to an LLC where they are then a co-owner? Would I still be able to do a 1031 exchange with the proceeds?
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#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
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#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
The only ship not designed to sail is a partnership.
Are you sure you want to take 100% controlled equity and roll it into a partnership? Where is the benefit for you?
If I were to do this, I would properly deed my personally-owned RE into an LLC. Make sure your lender, title insurance and hazard insurance are notified and ok with it.
Then have your partner buy into this LLC. But again, I don't see your benefit in losing control of the property your currently own.
To answer the 1031 to your LLC question, I will tag a colleague expert @Dave Foster. Hopefully he'll have a sec to help you out. Thanks, Dave!
Good luck @Kevin Kroll