All Forum Posts by: Scott Kays

@Scott Smith:

Very insightful and useful information! Thank you so much for taking the time to explain that! I may reach out once I start getting closer to my next venture.

Thanks again to everyone else for your contributions to this thread, as well! Much obliged!

@Mike S.:

Got it. Thanks for the heads-up!

@Costin I.: Excellent! Thanks for the info! I'm definitely going to look into this and have a chat with my title insurance company.

Thanks again!

@Costin I.: Thanks! That's helpful. I've never looked into the land trust concept, so that gives me some homework to study up on. It sounds like a great idea as it would avoid all the back-and-forth. I'll certainly check that out. Thanks!

On the other, I just read through that thread you sent, and that makes sense. One of the contributors to that thread posted this article: https://denhalaw.com/quit-claim-deed-of-property-may-adversely-affect-title-insurance/, which, if I'm understanding it correctly, answers my original question. That is, buying in my personal name and moving it to the LLC after the fact would essentially nullify my title insurance.

So, it appears that if I want to preserve the title insurance, the way to go would be to either do it the way I did it previously (i.e., LLC to personal name and then back to LLC) or go with the land trust option that you suggested. The latter sounds more attractive as it seems that it would decrease my costs and be a lot more practical from a logistical standpoint.

Thanks again!

@Mark S.: Thanks for the reply!

I'm assuming you're referring to the due-on-sale clause topic mentioned in the P.S. As far as that goes, my understanding is that since this is an FNMA loan, which provides for that exemption as part of the delayed financing stipulations, it shouldn't be an issue.

But, I guess my question is more to what liabilities I might be exposed to by buying in my personal name, refinancing, and then deeding it over to my LLC (1 move) vs. buying in the LLC's name, deeding it to my personal name, refinancing, and then deeding it back to the LLC (2 moves).

The one thing that came to mind was title insurance. On these first two properties, the LLC's name is on all of the original documentation, including the title insurance. However, if my original purchase and title insurance were in my personal name, but the long-term situation were for the property to be in the LLC's name, would my title insurance be void in that scenario?

Hello, Bigger Pockets community! I opened an account a few months back and have learned a lot from reading different posts and conversations, but this is the first time I've posted anything.

Anyway, here's my question. I bought my first couple of properties inside my LLC. Since these were cash sales, I'm in the process of moving them into a long-term fixed-rate mortgage in order to BRRRR out of them and pull the capital back out to reinvest. In order to get delayed financing, though, I have to deed the properties to myself just long enough to set up the mortgages and then deed them back to the LLC after the fact. Each time I move one of these properties, it costs me $110.00 in recording fees, etc. So, two properties moving one way and then back again would be a total of $440.00.

I was thinking that if I already know I'm going to have to do this on any future properties I purchase, would it make more sense to save half of those recording fees, etc., by making the initial cash purchases in my personal name so that I only have to move the properties once from my name to that of the LLC after the delayed financing mortgage process has been completed? It's not a ton of money, I know, but every little bit helps, and it seems senseless to pay extra fees if there's a way around them. Then again, if it's going to cause all kinds of problems that I haven't considered, then I suppose the fees for the additional move aren't the end of the world and are certainly worth the peace of mind.

I’m curious to know your thoughts on this. Thanks!

P.S. I know the above explanation might sound as though I’m going to trigger a due-on-sale clause; however, this is not the case for two reasons. One is that FNMA provides an exemption to the due-on-sale clause when executing a mortgage as part of the delayed financing exemption to cash-out refinances. Secondly, the bank I’m working with is already well aware that this is my plan and has approved it ahead of time.