Moving Rental into LLC

7 Replies

Have a few questions for those more experienced on here and would appreciate any advice. I've been renting out a SFH for about a year now. Currently have a tenant who will sign a new year lease in about a month. Have been advised by a few folks to move the property into an LLC. A couple questions:

-Will be looking at refinancing the property, the mortgage broker says it's ok to get the loan in my name since it's being noted that the property is an investment property and then to move the property into the LLC - thoughts on this?

-If I'm managing the property, should I conduct all business through the LLC (i.e. use LLC member after correspondence, in official documents, etc)?

-I've read some folks set up a secondary management LLC? How does this work and it seems like quite a bit of extra work and potentially an additional set of books, tax schedules, etc?

Thanks for the great information!

If you have only 1 property, it seems like a lot of overhead to setup an LLC to own the property and then another one for management. I would recommend just to get a large liability umbrella policy for now.

The broker that is suggesting to get the loan in your name and then transfer the title into the LLC, what does he say about the DOSC?? Assuming you are getting a conforming loan you will be violating the terms of the mortgage.

so if you own a few properties is good to own it under one llc and have another llc that manage it?

@Michael Peters , not really a good idea to put multiple properties under one LLC, otherwise it defeats the purpose of having an LLC unless you have very little equity in each of those properties and your assets are all hidden elsewhere.

it also depends on how your LLC is structured - will it be a single member one? If so, it will essentially have no distinction from you as an individual...

Large umbrella policies, an LLC management company, and land privacy trusts will be good... structure depending on what your primary concern is

@Stan Butler the broker just said he has had many investors do it that way. Would the other option be to move the property into an LLC first and then obtain the mortgage in the name of the LLC and myself? How does this usually work with a conventional loan?

The issue I have with umbrella policies is that many of them have exclusions which the owner would still potentially be liable for. Is there any additional liability coverage an owner can add (General Liability / E&O) that would be prudent?

NA NA, most lenders I know would require you to keep it under your personal name to obtain the loan, and then deed to LLC, unless your LLC already has 2+ years records. Otherwise, the lender may require you to deed it back to your personal name to obtain the loan.

I'm sure there are other lenders out there that might do otherwise, and if you come across any, please let me know! :)

I have two rental properties in the suburbs of Memphis, TN one has about 18% equity and one has 40% equity. They are both in my wife and my names not in a LLC. I know I need to set up an LLC to protect our other assets. My guess is I need an LLC for each property? How do I start? Can I move the properties to an LLC from my name? How do I handle taxes then? will I have to file my own of my W2 and then one for each LLC? I have had one of them for 6 years, what will be the effect on my personal taxes?

Those are great questions Sean. I am in a similar situation and would love to know if you ever received answers. Please advise. Thanks!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here