New to Real Estate · Houston, TX · Member since 2020 · 5 posts · 1 vote
Good day. I have been a real estate investor for the past year and currently own two properties in Texas. I recently set up an LLC mainly for tax purposes. The rental properties are currently deeded to my name. However, I'm looking to currently "lease" my rental property to my recently formed LLC and then sublease to my tenants when their current leases expires. How do I go about leasing from myself to my LLC legally and then subleasing? Is it as simple as just creating a lease and having my LLC as the "tenant" and creating another lease where my LLC is the landlord and the tenant is the tenant? Looking to get some clarity on this. Thanks in advance.
New to Real Estate · Houston, TX · Member since 2020 · 5 posts · 1 vote
5y
Wayne, my apologies. I realized I didn't succinctly provide clarification to my initial question. I created my LLC to take advantage of pass through taxation, however, my reason for subleasing is more to take advantage of liability protection.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Timikeyi Egbuson I can’t see that leasing the property you personally own to your llc is going to shield you from liability….You are still the owner, can be sued, and even if the llc “indemnified” you….you’d be paying /indemnifying yourself.
New to Real Estate · Houston, TX · Member since 2020 · 5 posts · 1 vote
5y
@Wayne Brooks thanks for your comment. Would you suggest transferring title to the LLC instead? I'm only worried about the due on sale clause with my lender
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Timikeyi Egbuson What kind of loan? If a Fannie loan, originated within the last 4/5 years, they specifically allow to transfer to a single member llc.
New to Real Estate · Houston, TX · Member since 2020 · 5 posts · 1 vote
5y
@Wayne Brooks the loan only originated last year and it’s a Fannie loan but that’s good to know that it can be done after 4/5 years ok after being originated. Thanks
@Wayne Brooks the loan only originated last year and it’s a Fannie loan but that’s good to know that it can be done after 4/5 years ok after being originated. Thanks
You misunderstood…if it was originated Within the last 4-5 years, it is specifically allowed. You are good to go, just contact your lender/servicer if you want to verify the procedure.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
5y
Get written permission from lender and servicer. There is no wait four years and it is okay. When you transfer the deed to LLC it is a SALE, you owe transfer taxes, and the county re-assesses property taxes. LLC does not stop someone from suing you.