Property in personal name, does lease have to be too?

Question

Hi, I just purchased two properties today. Due to loan requirements the properties are in my wife and my personal names. Was told by my insurance agent this is also cheaper insurance compared to if it were in an LLC. I am worried about the liability this creates. Can I now draw up the rental agreement in the name of my LLC? On previous properties I have done everything in my personal name and felt somewhat protected b/c my wifes name was not on any loan/title/lease so in theory no one could go after joint assets. I also have an umbrella policy for protection. If i do the lease in the name of an LLC is that just as if the LLC is acting like a property management firm and filter any profits through to me personally? What has everyone else done, I can't get a loan in my LLC but still want to keep myself/wife protected.

I also am worried b/c in 6 months- 1 year I will want to do a re-fi, if the Lease is in an LLC will banks still loan me money?

With an umbrella policy, what is the danger in doing everything in my personal name if i did the lease in our personal name?

Thanks in advance for your replies any insight would be appreciated!
Daniel

I also am worried b/c in 6 months- 1 year I will want to do a re-fi, if the Lease is in an LLC will banks still loan me money?

With an umbrella policy, what is the danger in doing everything in my personal name if i did the lease in our personal name?
  
Thanks in advance for your replies any insight would be appreciated!
Daniel

Daniel B. · Answer

Haha, Bill, no she's not doing anything like that.  I began investing before we were married and continued after we were married when she was still in school.  Now that she has a job we will probably buy the next property in just her name.  I really don't want to keep 3 seperate books for her, me and us.  I had thought I should do 3 seperate bank accounts for the investing of hers, mine and ours.  My thought was if I were ever to get sued they could not go after anything in our name or her name.  Vice Versa for her.    The ones that are in our name our goal is to refinance them down the road and put them in either her or our name.

I am worried about getting to the maximum number of loans, I was told by a mortgage rep it is ok to do them seperatly then we could get 10 each with fannie mae guidlines even if they are harder to acquire after 4.   Thanks again for your help!
Daniel

Bill Gulley · Answer

Daniel, if both of you own the property jointly, then both need to rent it on the lease. Properties in your name only would be leased by you.

There may be several reasons for a H&W to have seperate accounts, liability is not really one of them unless it's property acquired prior to the marriage and has been kept seperate without comingling monies. You should speak to an attorney about that.

Is she doing things that carry a great deal of personal liability? An insurance policy can take care of general exposures, so see your agent. :)

Daniel B. · Answer

Thank you Bill!

The other properties were just in my name and the Loan/lease only in my name.  As the properties we closed today are in my and my wifes name (including the mortgage) is there any problem with doing the leases just in my name on the new properties?  I don't want to set up an entirely separate set up quickbooks and the bank acct associated with the previous properties is also only in my name.  I am hesitant to add my wifes name to previous stuff as I want to keep her name off for liability purposes.

Anything wrong with this lease just in my name but having joint ownership?

Thanks!

Bill Gulley · Answer

I suggest you do the lease personally and increase your personal liability insurance. Involving an LLC can cause problems and offer little protection since the LLC does not own the property.

One issue is that using an LLC may require you to use an attrorney for any legal actions like an eviction. Another issue is that in some areas, your LLC may be seen as a property manager company leasing and requiring a real estate brokerage license (this can be argued).

If your income flows through an LLC to you, the income will be used to qualify for future loans, I don't see an issue for financing as far as recognizing income.

Just get more insurance and keep it privately held......