LLC vs Personal Name

4 Replies

Hello BP!

As many of us are consistently debating, holding RE in our personal names to take advantage of lower rates and better loan terms vs holding RE in a LLC to take advantage of liability protection, which do you do?

BUT is there an alternative? Many have financed RE in their personal names, then after closing quit claim it to their LLC...but what about the due on sale clause?

My question....can one hold RE in thier personal name and run the finances through their LLC? I understand one would not have the liability protection, but my thoughts are this:

1. I would never have to worry about my bank calling my mortgage due (quit claiming deed to my LLC)

2. I could purchase additional insurance to help offset my liability

3. As my properties are paid off, I could move them into my LLC name

a. As I increase in the amount of RE properties, I could refinance in my LLC name

I think the problem is that having the property in your name outside of the LLC defeats the liability protection which is the main reason you want an LLC. BTW - I'm not an attorney, so I may be wrong or just lying to you.

@Matt Shields

Yes, I do believe it does. My thought though is I have set up a LLC now to build for the future.

My liability is minimal as I have only a few properties. I have purchased additional insurance to help "offset" this liability for now. As the properties are paid off, I would transfer them into the LLC name.

My concern...Can I run the finances through the LLC?

I currently have the properties in my name and have a LLC that acts as the “management” company. The tenants pay the LLC every month and mortgages are paid from the LLC. The LLC is responsible for paying me back for anything it cannot afford and I have to loan money to it for. Promissory notes are written for any large expenditures.

Far more details I could go into, but this is a quick down and dirty for what I have done.

I don't see why you couldn't, it's just an entity, but I don't get the benefit. Also, have you asked your lender if you can switch ownership to an LLC. I just asked BofA about it, and they told me that as long as I owned the LLC and kept sending money to them they were OK with it. I understand your concern, right now the banks don't care, but if interest rates start going up a lot I could see the banksters looking for wraps and ownership transfers to accelerate loans and force them to refinance into higher rates, so get permission in writing. Again, I'm not an attorney and I would recommend running it past a legal professional.

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