Landlord (Lady)/Property Manager - LLC?

Question

I purchased a multi-unit home as my primary residence almost a year ago. I've been looking into whether or not I should get an LLC. I've read that since the house was purchased in my name and not a LLC, I may have to pay off the mortgage to have the deed transferred (not interested).

Would it still benefit me to get a LLC right now?  I am planning on buying more properties in about a year or so.

I was also considering getting a LLC as a property manager. My expenses are already separated but I'm not clear on the benefits.

Charles Carillo · Answer

@Adenike Roberts

Yes, most residential mortgages have a "due on sale" clause. If you QuitClaim the property to the LLC, and the bank finds out, it could be an issue. The bank would find out because you will add the name of the LLC to your insurance policy. With that being said, if the bank actually cares or does anything about it, is a whole other topic. In my experience, I have never had a bank call a loan of mine. My attorney has never seen it either; but, I have read about it online. Speak to your attorney before making any changes.

If you are self-managing, you should have a separate LLC for your management activities. Your Property LLC will never be used on any invoices, bills, leases, etc. You will use your management LLC for all of these activities. The property LLC should only be used to hold title to the property, nothing more.

Randy Rodenhouse · Answer

Yes I agree with Charles, just adding the fact that it is rare for Bank to call the loan due, but I would just keep that one property as you have it and then maybe get additional insurance. However, moving forward do you want to buy the property in LLC and have a separate LLC or S Corp. or even a C Corp. to manage the property.