Converting FHA to an LLC

[Adebowale Asaya]

Hi - I purchased a multi family with an FHA. I lived in the unit for over a year, and am looking to move and rent out the unit, and finally convert the building under an LLC. My mortgage company doesn't allow this. Any insight would be appreciated?

[Stephanie P.]

Originally posted by @Adebowale Asaya:

Hi - I purchased a multi family with an FHA. I lived in the unit for over a year, and am looking to move and rent out the unit, and finally convert the building under an LLC. My mortgage company doesn't allow this. Any insight would be appreciated?

You could leave it alone and keep the property under your personal name because many investors aren't ready to treat their first rental as an LLC and will co-mingle funds etc... piercing the corporate veil and losing any protection an LLC may have provided (If the property was bought with personal money and the loan is your loan and not the LLC's, you've already pierced the corporate veil and your personal assets may be at risk. Take some time and speak with an attorney about it.  Or...

• You could refinance into a loan product that allows it.
• You could leave it alone and get an umbrella liability policy to cover you from possible lawsuits.  This is the route I would take.

Stephanie