Can I Charge Tenants Through My LLC If I Have an FHA Loan?

2 Replies

The beauty of Real Estate Investing is the fact that we all find ourselves in unique strategies to approach our business.  With that being stated, sometimes it is difficult for us to find exactly what we are looking for in BP, so if there are any forums discussing this topic, please feel free to help guide me to the right forum.

I'm currently reading The Book On Tax Strategies for the Savvy Real Estate Investor. Amanda Han and Matthew MacFarland, awesome work! I'm reading the chapter "Your Legal Entities The Right Way" and I found a strong relation to the example of Andy. I have a static LLC that is not being used correctly.

My QUESTION:

I'm living in a house hack, my first investment property. Purchased with an FHA Loan in August 2017, I am curious to know if I can legally direct my tenants to pay their rent to my LLC although the property is in my name?

If not, what is the best option to place my property under my LLC and how long do I have to wait to do this under the terms of FHA. I've talked with my accountant and my lawyer and they don't seem to know this answer (kind of scary).

Thank you all in advance! 


@Cole Fisher - Your FHA loan has a due on sale clause, so as long as you have a loan, moving the property to a LLC is considered a sale and your balance of your loan can be made due in 30 days. This applies regardless of when you do it (day 1 or 25 years later)

Your LLC can be the manager of the property and collect rents and pay bills - and it will go on your Schedule E regardless of if you collect rent in your name or the LLC

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

@Cole Fisher

I second what @Brie Schmidt says. I'll also add that if your LLC is managing the property (and not owning it), there may be more beneficial entity structures available than just an LLC- such as an S-Corp.

Depending on certain factors, structuring the entity differently could save you money on Social Security taxes.

Be sure to talk with an accountant that has a full picture of you situation!

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