Our rental properties are in our names and not a business name. We are in the process right now of looking into transferring the properties into our LLC. After they are in the name of the LLC, will this impact the cost or availability of homeowner's insurance?
@David Hines If the property is owned by an LLC you'll have to get commercial business insurance. Its usually a bit more expensive than the standard homeowner's policy.
I'd be careful transferring the property to an LLC. In the past I never heard of a lender having an issue, but lately I've been hearing that some lenders are actually using the due on sale clause to force you to transfer it back. So make sure the lender approves of the transfer before you do it. Unless you have a really significant net worth, its probably more convenient and cost effective to just get a good umbrella policy. If you're really set on transferring the property to an LLC, there are ways to get around the due on sale clause by using a trust to exploit the loophole for estate planning. I would talk to an attorney before you do anything.
@David Hines did you find a decent homeowner's policy in Houston?
@Kevin Collins yes, I found some reasonable policies at Goosehead Insurance. We did not end up transferring our properties' ownership to an LLC, so they are just normal homeowner's policies without most of the coverage for personal property. We also have an umbrella policy just in case.
@ David Hines. Thank you.
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