Should I use my LLC or my own name for loans on rentals?

4 Replies

I have 3 rentals under my business name right now, One of them is on a 20 year fixed rate loan at 4.325%. The other two are on a 20 year at 4.5% but balance is due in five years. If I switch these two loans I can get them on a 30 year fixed at 4.3% but the catch is I have to put them in my name. I’m worried about the liability concerns of having the rental properties in my name. I do have a $2 million umbrella policy over these properties with my insurance. Should i go ahead and refi to lock in the rate or do i stay Under the LLC and hope rates don’t jump too high in the next 5 years? Any advice would be greatly appreciated.

I think the additional risk you place on yourself by transferring the loans to your name is minimal. I think you would sleep a lot better at night knowing that your rate is fixed. But it is really personal preference; would you rather stress about rates or about your personal credit. I'd be interested to hear your thoughts on that.

@Rob Beardsley Thanks for the reply. I think i'm more concerned about what rates are going to do. Going to the 30yr would increase my cash flow considerably & I wouldn't have to worry about the loan rates again.

I would have to agree. I am pretty sure you are still personally liable even when your LLC is on the loan. Only big time commercial non-recourse loans relive the personal responsibility on a loan.

In my opinion, LLCs don't offer protections so great that they would be worth forcing on your properties, and possibly messing with your rates on the financing. Here's tons of info to consider, and read through the comments too-

I'd say more than anything- run the numbers on the different scenarios. Which would be more beneficial financially-- paying off those two loans in the five years or refinancing onto 30 years. The only reason I can see that you'd want to refinance is either because you won't have the money to pay the balances in five years, or if you refinance into 30 years you can increase monthly cash flow, pull out equity, or to stay at full leveraging. 

Mostly depends on the numbers in my opinion.