LLC vs Personal Property finances and mortgages

5 Replies

Hi all I have a few questions regarding properties under LLC vs personal for buy and hold / BRRRR strategies...

Can a rental property be under our personal names (mortgage title/deed), but the bank account for rental income be under an LLC account? Are there any risks/ benefits from this? OR does the ownership of the property and bank account have to be under the same (either both personal or LLC)?

Are we able to refinance under an LLC just the same as a personal?

Is it hard to change a property ownership from personal to LLC? Risks/Benefits?

I am asking because I have read refinancing under an LLC is more difficult with banks. But we wanted the rental income to be in a separate account than our personal accounts. Are we able to have the mortgage under our personal name but have the bank account under an LLC?

Thanks for all of your help! 

Originally posted by @Alexandra Sales :

Hi all I have a few questions regarding properties under LLC vs personal for buy and hold / BRRRR strategies...

Can a rental property be under our personal names (mortgage title/deed), but the bank account for rental income be under an LLC account? Are there any risks/ benefits from this? OR does the ownership of the property and bank account have to be under the same (either both personal or LLC)?

Are we able to refinance under an LLC just the same as a personal?

Is it hard to change a property ownership from personal to LLC? Risks/Benefits?

I am asking because I have read refinancing under an LLC is more difficult with banks. But we wanted the rental income to be in a separate account than our personal accounts. Are we able to have the mortgage under our personal name but have the bank account under an LLC?

Thanks for all of your help! 


If the property is owned by you, why would an LLC received the income? That would create absolutely no protection as the LLC would have no reason to exist whatsoever and would be considered your alter ego.

You would need to transfer title of the property to the LLC to make it work. The transfer is easy, you just need to deed it (preferably with a Warranty or Special Warranty Deed) to your LLC. That transfer would be entered in your LLC book as a member contribution.

However, transferring the title of the property may trigger the due on sale clause of your mortgage. Some lender will have no problem with it, while other will.

Refinancing a property held by an LLC is way more difficult than if it own under your own name. Less lender are doing it and usually you will have commercial loan rate (around 1% higher than for personal property).

 

Refinancing an LLC is not a problem since you'll have an operating agreement with named officers that the bank will conder on the personal side.

In addition, it is a Limited Liability Corp, which means recourse is usually (TALK TO AN ATTY FIRST) limited to the assets in the LLC. Much better than holding it personally.

Depends where you live.  I'm in Portland-METRO and lic in OR/WA.

For a loan, you'll need to qualify the property (i.e. how well does it generate income to pay back the debt - aka DCR and does it have value more than the loan amount - hence appraisals) and qualify personally (i.e. how well qualified are the owners to pay back the debt).