Making my primary residence a rental when I move!

8 Replies

Preparing to move and making the transition from house hacking to full rental property.

Long story short I bought a home for it to be a turn key rental, but to house hack in the mean time. This is my first house and I don't really know where to start with making the transition into an LLC and so on. I plan to use a property management company but I have not begun vetting the companies in my area. Some questions that I am having a hard time finding the answer to are the following.

If the house is moved into an LLC does it have to be a legal sale?

If the mortgage is in my name but the house is in an LLC am I still protected?

What are some red flags to watch out for when looking into property management companies? I seem to hear more about the bad ones than good ones.

Do I need an attorney to help me with forming an LLC?

Should legal support as part of a property management company, lease, etc.. adequately protect me?

I appreciate any advice or help on this! This is my first time owning a home and will be my first rental. I have been doing research on forming an LLC. Starting to understand but getting into unknown territory and feeling stuck.

With only one rental, it wouldn't hurt to talk to your insurance provider about getting umbrella insurance instead of forming an LLC. It doesn't cost much to get a $1M policy, that's plenty of coverage when starting out with few assets.

Ditto.  A standard landlord policy will you get you $300K in liability insurance.  If you believe this is not sufficient, you can get an umbrella with an additional $1M (or more) in coverage for a few hundred bucks extra.  

Lot of great questions and i’d love chat with you and help you thru this.  It’s a powerful start to RE Investing!

Pm me or shoot me an email.  


Tjc real estate.  


@Christian Verges I just went through this same process. We turned our primary residence into a rental, and purchased a place to house hack. We filed our LLC Through Incfile. It was inexpensive and easy.

As for the transfer of title, we kept ownership of the houses, and the LLC manages the properties. So we are more or less self managing the properties.

If you end up going with the LLC route, make sure that there is not a "due on sale" clause for your mortgage. That is saying that if the mortgage transfers ownership, the bank CAN call your note due in full.. most VA loans have them.

I would just get a umbrella policy. LLCs protect you from lawsuits but you most likely are not very attractive to a shark trying to get a lot of money because you only own 1 rental and are very leveraged.  

I am with the group on doing an umbrella instead of LLC. Usaa can set that up for you very easily.

For the property manager search:

-Use a professional property management company (not a real estate agent whose main focus is selling properties)

-do a Google search for rentals in your area and see what pops up. (Because that is what your tenant will be doing to find a place)

-look at each Google results property management website and see how it is set up. Would you rent from their site, do the pictures look professional, does the website look like something from the 90's or is it well maintained and updated, does it have a home owner portal, etc.

-once you have picked ones you think look good then Google each of those property managers to look for customer reviews. If they are a bad property manager it will be apparent from customer reviews.

-10% is the normal property management rate, don't expect to pay more or less.

-ask them what fees they charge. A lot of property managers are starting to have hidden fees for every detail of their job (i.e. listing fee, eviction insurance fee, advertising fee, etc). A couple of these garbage fees may be tolerable if the property manager has really high reviews, but in general the 10% is their payment to do their job and many of the"extra" fees are just things from their job description so it is just a way they are trying to make more money from doing what they were already supposed to do.

- expect to pay some upfront fees to get your house rent ready. The property manager may want it professionally cleaned, repainted, or professional photographer photos for the listing. These are pricey situations at the beginning but if they are asking for it then you at least know they are wanting the best for your rental. Save about a 1,000 for rent prep fees, just in case they are not willing to take the debt out of the first months rent.


When you move out, the property stops being an “owner occupied” property.  This makes it ineligible for most homeowners policies.  You should check with your agent to see if you have to rewrite it to a different policy (dwelling/fire form, etc...)

@Christian Verges I wouldn't spend the time or money to set up an LLC for one property. Wait until you have multiple properties and you can start writing off more on your taxes through a business. An LLC doesn't really do you much good right now. As others have already stated, just get yourself some umbrella insurance and then go buy more properties. Focus on building your assets first. Good luck and let me know if I can help in any way.

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