Leasing property to LLC - Question

[Mayank Jhaveri]

Hi All -

In the process of getting our 2nd Airbnb started. For our 1st one, we have transferred the deed to an LLC, but someone mentioned that leasing your property to the LLC is also a smart way to still keep the title in your name.

Curious how people set this up? Just right a rental contract with the LLC like any other tenant and then have utilities setup under the LLC's name?

I know 1 major pro of this method is the ability to re-finance without doing another deed transfer, but any other major pros and cons?

Thanks,

Mayank

[Michael Baum]

Not sure why @Mayank Jhaveri. I don't think it offers any protection. You are in control of the LLC so not sure why anyone would be doing this.

[Chris Seveney]

@Mayank Jhaveri

If you bought it in your name and transferred it to LLC or leased it to LLC you have zero protection.

I assume your LLC did not pay for the property and just transferred which is not an arms length transaction and your LLC is just an arm of you personally not it's one separate entity

Not attorney but use them daily and they all the same thing about this, this would be easy to pierce but usually never gets done because people rarely get sued and if they do they have insurance

It’s just a huge waste of money for most.

[Sarah Kensinger]

It is a little concerning some of the legal misinformation that is passed around on these forums, so make sure you contact a real estate attorney that can guide you through the proper process for your situation. But we were advised to follow the exact steps you lined out in your second paragraph for leasing the property to the LLC. Just use a normal rental contract that is stating the LLC is renting the property from you (the owner), then the LLC would act and do as any other normal PM would for someone's property.

[Leslie Anne Morris]

If you’re worried about liability the best thing to do is have a robust insurance policy. I have commercial liability insurance coupled with home owners, loss of income etc. 

[Mayank Jhaveri]

Thanks all for the information, I appreciate it.

Sarah - I will connect with you to better understand how you went about it.