All Forum Posts by: Desmond Fielding

Hello, my wife and I are moving at the end of the year and plan to rent our current primary residence (SFH 3bd 2ba) it will be our first rental. One of my wife's friends who knows we're moving and planning to rent reached out that she and her fiancé were interested in renting our house. What has been everyone's experience with renting to friends?

I was a little hesitant to rent to friends as I would prefer to keep business and family/friends separate, but to give a little more context they have been friends for many years and do seem like they'd take care of the property, however you can never be 100% sure. Her friend is a hairdresser and the fiancé is just starting med-school. The one reason I am interested is that they're looking for a long term place as the fiancé will be in med-school for the next 4 - 8 years, so it would be nice to not have a ton of turnover. What's your thoughts?

Thanks in advance!

If you get a conventional loan with Fannie Mae/Freddie Mac they require the servicer to allow the transfer after 1 year. I just completed a transfer to my LLC using this method, so if you're able to wait a year it shouldn't be an issue.

Alex, I have run into this question myself as I was saving money for my next rental. On one hand you don't want to lose money in the market if you plan to use it within the next 24 months, but on the other hand hate to see it sitting in your bank account not working for you. 

I'm not sure if you have a Financial Advisor, but through the advisor I work with I was able to put some of my savings into a principal protected structured note tied to the performance of the S&P 500. If the S&P went up I could participate in up to a 21% return, but if it went down I was principal protected and would receive all my money back at maturity (13 months). It tied up my cash for 13 months, but that lined up with my time horizon. Basically, if the market went down it would be like my money was just sitting at the bank because it was principal protected, but if the market went up I wouldn't be regretting leaving my money actually in the bank. Seemed like the best of both worlds. Not 100% sure of your situation, but maybe this is something you'd want to look into. 

Caroline, I appreciate your response and apologies for my delayed response. I forgot about the thread until I just saw someone upvoted it. I figured I'd share my experience for anyone else who comes across this post. 

While it may not be the same for every state and/or servicer, in order for me to transfer my house to an LLC it only required me to submit a few simple documents: copy of the filed Certificate of Organization reflecting ownership, copy of the filed deed deeding property to LLC, documentation from local tax authority showing LLC as the owner, and hazard insurance with LLC listed as owner. 

It was a fairly simple process. I would have to disagree with you as I don't believe I had to disclose every little detail and can't avoid personal liability. All information that was disclosed could have been found online through the local registrar or state treasury except for proof of insurance. 

Bruce, that is a valid point. I have included language in the lease addendum to the effect of "you agree to indemnify and to hold us and our agents harmless from and/or for any and all damages of any nature or kind arising from your use of the equipment" which should help cover that kind of scenario. 

Michael,

That is what I'm thinking too. I think I'll just ensure they know how to use it/setup the controller. Any damages outside of normal wear/tear they will be liable for as a provision of my lease. Thanks for your feedback!

Jason, thanks for the feedback! That is what I was thinking as well. I would just leave behind the push mower/weed whipper I currently use and purchase another inexpensive set for my next house. Thanks for your response!

Hello,

My wife and I are going to be moving out of our primary residence soon so we can do a house hack and will turn our current house into our first SF rental. I had a few questions for other landlords who have lawn/snow care as part of the tenants responsibilities. In my area, I see a lot of other rentals posted with lawn/snow care as part of the tenants responsibilities and I would like to do the same. For other landlords who have tenants manage lawn/snow do you provide any equipment to them  (push mower, weed whipper, etc)? Also, the house has an in-ground sprinkler system. Do you let tenants manage the sprinkler system and choose whether they want to run it or not or should I just do away with it all together so it's one less thing to worry about? 

Thanks for your help and advice!

I have seen a lot of posts on BP Forum regarding transferring a rental property from your personal name to an LLC and have searched the forums in the past trying to gather information. I haven't run across a post with this information, so I thought I'd share as it has helped me. I know a lot of people are afraid of the "due on sale" clause when transferring property to an LLC, but if your loan is from Fannie Mae or Freddie Mac you're able to transfer without fear of the "due on sale" clause.

In 2017, Fannie Mae updated their allowable exemptions to include transfer to an LLC. The specific language is below and I've included a link to Fannie Mae's site as well. Freddie Mac has similar language in their servicer guidebook as well. 

"Unless the previous borrower requests a release of liability, the servicer must process the following exempt transactions without reviewing or approving the terms of the transfer:

A transfer of the property (or, if the borrower is an inter vivos revocable trust, a transfer of a beneficial interest in the trust) to a limited liability company (LLC), provided that the mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, and the LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence)."
https://servicing-guide.fannie....

This will not work for everyone, but hopefully this information helps a few people who do have Fannie Mae or Freddie Mac loans and want to transfer them to an LLC.

@Doug Todd - I am in West Omaha and would be interested in joining this group meeting. I will direct message you.