Those of you that hold your rentals in an LLC? How do you do it? For various reasons, I would like to, as I buy rentals, have them in the name of my LLC. I know some people disagree with that idea, but it is something I do want to do.
So, I am trying to figure out how those of you that do hold your rentals in an LLC or LLCs, how do you do it? Don't I have to get a loan in my name (if conventional) So then transferring to the LLC could trigger the due on sale clause? Do you just go through hard money lenders? I just really want a 30 year term on my first few. Just in case.
Would love any advice/ideas.'
Thank you all!
You just deed them from you to the LLC. I pay cash so no one to answer to.
If you have a mortgage the bank may not care as long as your making payments. Worst case you just deed them back.
I create my own deeds all the time and then file them.
I am interested in this as well, and so far have been preparing my own deeds.
I am wondering from my limited reading more curiosity than anything. Would deeding the properties to your LLC yourself break the chain of title, and void title insurance or make it harder for the next buyer to get it if they did want to go through a title company?
I just moved some of my property from Me and Spouse to LLC. Simple warranty deed. It's simple if you own the property outright. If a bank lien is involved you need to go there first otherwise you surely trigger a due on sale . I suggest doing it through the title company.
@Richard Heine - have you done with with an encumbered property? If so, I would like to hear how it went. If you don't mind sharing.
@Brian H. Richard is spot on with the General Warranty Deed. I see lots of suggestions for using a quit claim, which cancels title insurance. General Warranty Deed FTL! You can find them online specific to your state. Google can also tell you the two step process to make it happen. Through research I have decided to put each property into an LLC due to the incredibly tiny risk that the title transfer may trigger the due on sale clause and the large risk that a tenant will sue sometime. Using a trust may also be a way you could deal with the due on sale clause. I suggest considering using a separate LLC for each property to minimize asset exposure and making sure that whoever is on the mortgage also be a member of the LLC for a continuous line of responsibility.
This comes up a lot.
Quitclaim deeds do NOT negate title insurance.
It's the transfer to the LLC which affects title insurance... the transferee LLC does not meet the definition of "the Insured" under the standard ALTA owners policy.
Updated about 3 years ago
To be clear I should have used the word "may" as in the LLC may not meet the definition, depending on who owns the property and who owns the membership interests in the LLC. In any event it would be wise to research this issue before transfer and, if necessary, obtain an additional insured endorsement.
Thank you all for your replies!! I feel they will be helpful, I just don't understand a bit of it. I am assuming that consulting my real estate attorney is the best method in regards to all of this? A lot of what you all are talking about goes right over my head but I would like to learn more about all these things. Are there some good resources online for further educating myself?
Lots of great resources. I have found that the most helpful cost at least some money or a library card. Loopholes in real estate will speak directly to the questions you're asking in the later chapters.
Get your LLC in NC today, Look here, $30. Takes about 15 minutes online. The paperwork is very generic. You can find it anywhere online. Take the fancy State document and go to the bank and open a checking account. They will only offer you a business account. Now, when you make an offer on a property, the purchase offer will say buyer is XXX, LLC and you will sign your name.
When you shop that around for money a bank will be happy to loan but you will be asked to sign a personal guarantee. There is really not that much more to it. You only have to deed it once from seller to your new LLC.
Say you want the spouse or kids to be part owners. Boom, add them to the LLC.
Hi Brian! I have come across this as well with investing, and my best advice would be to find a great real estate attorney and have them assist in this.
I do think that it is very wise to put your investment properties into LLCs, and I would recommend that you put each property into their own LLC to create a greater veil of protection for yourself.
Best Wishes to You!