I am looking for some advice from seasoned veterans regarding my options for my current real estate situation.
My partner and I are just getting started in real estate. We are trying to make our next move a smart one in hopes it will help us expand our portfolio faster. Currently, we only have one commercial rental property that is in an LLC that we each own 50% of. I also own my principal residence. I believe there is about 40k in equity available in the house from looking at comps and considering the updates I have made. I am moving and figured converting my current home into a rental would be an easy way to expand our rental portfolio. I am contemplating a few options, but am willing to do almost anything that would be beneficial for the long run. Here are the options that I see:
1. Sell my house to our LLC and rent it out. This option would give me ~15k cash to invest in other properties(the other 25k of gain would be used as a down payment). I have looked up so many articles about related party transactions and I haven't found anything that would disallow the 121 exclusion based on selling it to a multi member LLC. Especially if the second member isn't a "related party". This seems to be the best option in my point of view(unless a real estate CPA on here blows a hole in my hopes and dreams and tells me my gain would be taxable). I currently have two people interested in renting out my home at about $100-200 cash flow a month(I have vacancy 8%, cap ex 5%, expenses 5%, property management 10% already calculated into my numbers).
2. Sell my house to a third party. This option would give me ~40k to invest in other properties. This could be appealing in order to purchase a multi family or another commercial property instead of having a single family home in the portfolio.
3. Keep my house in my name and rent it out. This option is concerning to me because I think having a mortgage still in my name will cause me issues when I go to purchase my new home. But this option would help from a cash flow perspective since my mortgage rate is lower than what an investment property rate would be. (Yeah yeah… I know about the due on sale clause, but it's a risk I think I'm willing to take).
I don't see any other options, but I feel like there has to be something I am not thinking of. Any advice would be greatly appreciated.