Can I (and Should I) Move My Property Into an LLC and Out of My Name?

by |

This question comes up with utmost regularity, and the answer, as is the case most often in real estate investing, is a bit muddy. So, let’s underscore a few things:

Download Your FREE Rental Application Form!

It may seem like a small thing, but having a solid rental application is the first step in finding great tenants. Since BiggerPockets is all about helping you succeed in real estate investing, we’ve put together a complimentary Rental Application for you to use. Download it today and go find some great tenants!

Click Here For Your Free Rental Application

Why Folks Want to Move Assets Into an LLC

I don’t think it’s a secret to anyone that the HUD, along with Fannie Mae and Freddie Mac, has done a fabulous job of making home-ownership in America accessible to lots of citizens. They’ve done so chiefly via the introduction of a 30-year mortgage. The idea behind it was that an average citizen, having taken on a 30-year loan, will spend their working years paying it off, and in time for their retirement, they would have a paid-for house in which to retire.

There are, of course, a couple of problems with this. One, on a 30-year amortization, a lot more interest is paid to the bank. Two, the type of employment infrastructure whereby you get a job with a company and stay there for 40 years is no longer the norm in today’s economy. Three, if you do stay in that house for 30 years, by the time the mortgage is paid off, your house is little more than a dilapidated, outdated, functionally obsolescent “pig” — specifically, if it was 20 years old when you bought it. Besides, in 30 years there’s going be no water left in California and no jobs in Ohio — so people from both states will either have to relocate to Colorado, where pot makes everything better, or to Mars with Elon Musk. 🙂


Related: Accounting Practices for LLCs: What Every Real Estate Investor Should Know

There is One Feature That is Very Attractive

The reality is that we live in a debt economy, and this means that unless we go back onto the gold standard, debt is as much of a tool as anything else. And, relative to money coming in and going out, the debt service is frankly more important than debt itself.

Well, that magical 30-year amortization is appealing to a lot of investors specifically because it comes with the low payment. Yes, it’s more expensive over the life of the loan. If this is for a rental property, you are not the one paying the debt service anyhow, and with a lower payment, there’s a bit more cash flow to be had.

This is indeed attractive to a lot of investors.

Who Can Qualify a 30-Year Mortgage?

The secondary market guidelines limit access to residential mortgages to individuals, meaning no entity other than a human being can qualify for secondary market residential note. While there are some rare instances where portfolio lenders originate 30-year residential paper that do not sell on the secondary market, by and large in order to obtain 30-year amortization, investors have to follow those secondary market guidelines.

What this means is that 99 times out of 100, if you want a 30-year amortization, you must put your name on the deed.

“But I Want an LLC.”

That’s right — ideally, from the standpoint of asset protection, it’s always better to buy property inside of an LLC. And thus you have a choice to make — either get a 30-year mortgage with lower payments and higher cash flow but put your name on the title, or buy in an LLC but most likely get no longer than a 20-year amortization, higher interest rate, and potentially higher down-payment.


And this is what everyone immediately runs toward — unless I can buy the property in my own name and immediately quit claim deed it into the LLC.

A few things to note:

Due on Sale Clause (DOS)

Due on sale clause is present in vast majority of modern paper, and it essentially provides the lender the right to trigger the acceleration clause. The trigger event is transfer of any portion of ownership interest to an entity other than that which is on the deed and the note.


Related: 5 Reasons I Do NOT Invest in Real Estate Using An LLC

Acceleration Clause

The acceleration clause simply forces accelerated repayment of the outstanding balance of the mortgage. And guess what? Transferring title from yourself into a single member LLC is by most banks considered transfer of ownership interest.

“Oh, the Bank Will Never Find Out”

I’ve seen it happen, guys. My attorney has seen it happen. Yes, as long as the payments are made, perhaps the bank has no reason to look — but perhaps they do look. Are you willing to play that game with $50,000? How about a $500,000 mortgage? How about $5,000,000?

So, Can it Be Done?

Yes, if you ask your bank and receive a written permission to do it, then quit claim all you want. But most banks won’t go for it from what I’ve seen.


This issue is really a choice — do you want liability protection, or do you want higher cash flow via longer amortization and lower debt service? This is the decision for you to make. 🙂

Investors: How would YOU answer this question?

Weigh in with a comment!

About Author

Ben Leybovich

Ben Leybovich has been investing in multifamily real estate since 2006. His area of expertise is creative finance. Ben works extensively with private as well as institutional financing. Ben the author of the Cash Flow Freedom University and creator of a cash flow analysis software CFFU Cash Flow Analyzer.


  1. Sunny K.

    Great post Ben ! I have been looking for an answer for this question and this post explains much of the issue in detail ! Now I just need to see if the local bank that I have good relationship with is ok with something like this…

  2. George Krischke

    To get the desired increased liability / asset protection that owning real estate in an LLC might offer, it makes more sense to simply have an additional umbrella insurance policy in place. You will have the attorneys of the insurance company work for you to mitigate potential claims.

  3. Sergio A.

    Something else to consider is transfer tax. Here in Philly, even though the owner is the same person, an individual would be transferring the property to a different entity and therefore be subject to the 4% transfer tax, which makes it a huge cost to consiser.

      • Joseph Druther

        Taxation? Robbery? For doing absolutely nothing but getting in your way? I mean c’mon, the government wouldn’t “STEAL”, would they? Let’s not get crazy now 😉

        4%…. 4%!!!!!! Just to change the name. Unbelievable.

        • Matthew Newcomer

          Is that 4% of the current mortgage balance? Of the current assessed value? Of the original sale price? I purchased my first home (a duplex) 6 years ago in my name as my primary residence (have since moved out and have been renting both units) and am considering transferring the title to an LLC as I build up my real estate rental business. I’ve heard that it’s a similar fee in Baltimore but I’m not sure what the basis is to calculate the amount. Thanks!

  4. Sheila F.

    GREAT explanation. A question I do still have and perhaps you can answer it in understandable terms, does an LLC really protect you??? Lawyers go after everyone in a lawsuit. Do you REALLY get that protection???

    • Ben Leybovich

      Haha – why beat around the bush, sheila…lol

      Yes and no. It’s a very intricate conversation to answer your question – not appropriate for this forum. Just know – LLC will not shield from illegal or criminal activities 🙂

      Aside for this, how much do you stand to lose 🙂

  5. David Roberts

    Sheila i have the same question. I was originally told to have a resident agent also so that i couldnt be “found”. Sure maybe so anyone cant find me, but lawyers will find me lol. I tend to think if you do something wrong then it doesnt matter what layers you have. But I think having more insurance seems like the better way to go. Im relatively new to RE so take whst i say with a grain of salt, but i am a cynic of law and government and i tend to think if they want to get at you, you cant hide. .

    • PJ Muilenburg

      Well be just as cynical about insurance companies and their umbrella liability policies. I have no idea how common it is but as Joe mentions above, their are at least several exempt losses it won’t cover. Hey I actually do have an umbrella policy but do know its limits. I don’t plan on getting an LLC until I have enough properties/equity to protect. Believe me, a lawyer going after me would be disappointed to see my newbie portfolio ?.

  6. Excellent article Ben! This question constantly comes up so thanks for detailing the options and repercussions so clearly. Though with us Californians and the Southwest depleting the water supply from the Colorado River, where would we turn? Washington?

    Personally, I’m looking to I think the risk to secretly quit claim the property over to an LLC under the bank’s radar is taking a bigger risk then just holding it in your personal name and getting adequate liability insurance on your properties. Acquiring the lowest rates and longest terms on your loans will reduce your operating costs for years to come. Not to mention the lower down payments needed will boost your cash on cash returns.

  7. Steve Vaughan

    Thanks for sharing, Ben. I woulld just add to make sure title insurance and hazard insurance are taken care of if folks are so inclined to put little houses into LLCs. The named insured will no longer own it. Happy asset protection!

  8. Kevin Decker

    From my studies and experience so far I would definitely put it in an LLC. “Adequate Insurance” will not give you personal liability protection. Even better protection is putting it in an LLC that is owned by your Self-Directed IRA. Then your income is not taxed until you use it in retirement and if someone sues they will have to wait until you take out money to collect which could be years. Any good lawyer would inform their client as such. In the meantime they would be taxed on that money as though they had already received it. No one in their right mind would do this. My advice is check with a RE Attorney and a CPA who is knowledgeable about SDIRAs.

    • Brian Levredge

      Kevin, there are a couple potential issues with that strategy as I see it. First is the issue of recourse. The article is primarily about moving financed properties into llc’s out of one’s own name. An llc owned by an IRA would have to have non recourse financing in place. While there are some lenders out there that do them, non recourse loans under 1MM are generally hard to get and have high hurdles.
      While I think you’ve posed a creative asset protection strategy it comes at a steep price in that you are re-characterizing the income you receive. IRA’s are taxed actively on distribution whereas non IRA owned real estate is taxed passively (generally). Depending on your bracket that can be a pretty big hit to take. There’s also the loss of write offs you get from owning rental real estate when moving it into an IRA to consider as well.

  9. Andy H.

    I’ve heard that you can get around the due on sale clause (and transfer tax) by first deeding the property into a land trust where you are the beneficiary. Once that is done, you change the trust documents (which are not public) to name your LLC as the beneficiary. Curious to hear your thoughts on this, Ben.

  10. Kang Thao

    Ben Leybovich, great article and explanation on the topic. Just wondering… are your properties under a LLC or just under your name? And yes… I believe an umbrella policy is a must. I personally plan on using a LLC later down the road when i start to acquire more than 10 units. Thanks!

  11. Tapiwa Wakatama

    I want higher cash flow… at least starting out. As a beginner, I really don’t have any assets to protect.

    I would definitely acquire proper protection once I approach measurable assets. Thanks for writing this clear article!

  12. Elizabeth J.

    I am in this very situation right now and am considering putting some of our properties into L.L.C.s with the understanding that the bank could call in the loans and I would have to pay the balance on the loans. I waited until the mortgage balances were fairly low so that I could do this if need be. I found it a bit ironic that it seemed so complicated to do this with a conventional loan on a single unit property but quite easy with our apartment building that required a commercial loan. The commercial loan process was quite onerous, but we had no problem setting up an L.L.C. for the building and purchasing the building in the L.L.C.’s name. I agree with having very good insurance, as well, for any property. Even though we have our largest property in an L.L.C., we purchased insurance with high limits of coverage – probably more than necessary – as we have quite a few tenants, many people who are their guests or working on the property coming and going, etc. Plus, it is an old building with still some areas to improve. Thanks for the article!

    • Charles Morgan

      Tagging is not currently working for me but, what you might consider Elizabeth is actually paying one off, then transferring it, then taking out a refi to pay off another one to transfer. You would avoid possibly ticking off someone at your bank while accomplishing your goal.

      • Joe J.

        I had virtually the same question/idea:

        Is is possible to refi a paid-off property inside an LLC on favorable terms? Or is one then limited to less-favorable 20-year loans with higher interest rates…

        • Garry C.

          I recently spoke to my mortgage broker about this situation. He told me that the lender would require me to deed the property back to myself at closing, before refinancing. And that I should then be able to deed it back to the LLC after about 90 days, when the lender is done with all of their paperwork and such.

  13. Jason Remington

    I’m in the process of doing this and have been working with a local bank to help me through it. So I have the LLC and plan to move a couple of properties into the LLC. I have about 60-65 LTV on them. So the local bank is setting me up with a business line of credit up to 80 LTV. Between my attorney and local bank (commercial lending manager)…the thought is that banks normally don’t trigger the due on sale for performing loans (not saying it doesn’t happen), so go for it. However, in the event they did, due to my LTVs being below 80% my local bank will do a 20 yr amortized commercial loan on them to pay off the lender calling the mortgage due. I guess I could even use the business line to pay the balance in the short term and then work a cash out refi or something. Thoughts…?

  14. Stan Hill

    Thanks, Ben. After hearing about starting an LLC over and over again, we had a rude awakening when we financed our first duplex. We have elected to finance in our name and buy an umbrella policy to pick up where the homeowner’s policy leaves off. Barring something catastrophic (which in many if not most cases requires the owner of the property to be negligent), we believe we are reasonably protected and are maximizing our cash flow.

  15. Michael Dake

    This is a great post, Ben. I am glad that I found it. It brings up very valid points and makes clear that an investor owner is faced with a choice. Pick one.

    It is funny how many meanings the terms “residential” and “commercial” have in real estate. Clearly “residential” means “place where you live.” “Commercial” refers to “place where you try to make money.” Residential underwriting standards are designed to allow maximum possible owner-occupancy of homes, whether SFRs or du-, tri- or four-plexes. That is a public policy goal HUD, Fannie, and Freddie were created, in part, to achieve. Commercial underwriting is designed to ensure maximum risk management where the owner is not expected to be present. That is to protect the owners of the lending institution. To some extent, applying for a loan under residential underwriting for commercial purposes is a bit of a stretch of the boundaries. Ben has done a good job of laying out the choice that is involved in what type of underwriting to us. Others have raised the issue of insurance -title, property, and liability, which also has different underwriting standards based on the degree of involvement (living there or not) of the owner.

  16. Michael Dake

    BTW: The idea of using an LLC or other corporate form to mask the identity of the ultimate owner of property doesn’t really work. Look at the Co-Star report on any property. It lists “Recorded Owner” and “True Owner.” I don’t think that “True Owner” is a very good way of describing the investor. The Recorded Owner does truly own the property and is simply itself owned by another entity or natural person. Standing behind an LLC to mask identity is kind of like the Wizard of Oz working behind a curtain.

    • Kory Thaut

      An investor friend of mine had a loan that had the due on sale clause discussed in this article. Bank found out they transferred and all they did was ask that it be transferred back, no pressure to pay up. I’ve heard of this same scenario a few times… but never have I heard of someone having to pay up.

      • Garry C.

        If I’ve already done the QC to LLC, and now want to deed it back to my name for the purpose of refinancing, shall I assume there is no reason to do the warranty deed now?
        Or, if doing this during closing on the re-fi loan, will a warranty deed give me the title insurance back?

        • Kory Thaut

          I’d just use the quit claim to get it back to your personal name for the refi. Id then use the warranty to move in the future when you have title insurance.

  17. From an asset protection standpoint only, meaning protecting the property, but not you personally; having a mortgage on the property MAY discourage or at least minimize the attractiveness of a lawsuit as the equity has been “stripped” from the property. A good strategy similar to “owning nothing of value”. This is another strategy along with having an LLC.

  18. Huiping Sheng

    Why I heard the Scott Smith of BP podcast said he never see one due on sale happened on his clients after they transferred their property to their LLC.?

    Still not clear the relationship of LLC, trust regarding how to protect personal assets.

  19. Casey Murray

    Love the pros and cons of this article, Ben. I wonder if each bank has a standard process dealing with this situation or if they treat transferring a property from personal ownership to entity ownership on a case-by-base basis.

  20. Rick C.

    Great article, Ben! Thanks for sharing. I really appreciate the insight you have continued to provide myself and others in the BP community.

    I know everyone’s situation is different, but what route have you gone with your own portfolio in terms of using an LLC vs a personal name?

  21. Jeff Brown

    Hey Ben — Not only have I seen lenders demand full payment due to unauthorized changes in title, I’ve seen it by the thousands. Those feeling all warm ‘n fuzzy now cuz lenders aren’t paying attention, allow me to give you a tip that let’s you know when the lenders will turn into predators. When the spread between your loan’s interest rate and the current market gets to the point lenders can’t resist. At that point they will pounce in earnest. This isn’t theory, as I saw the blood in the streets the last time folks thought they could outsmart lenders. That, my friend, ain’t reality. They’ll come for you loan, and they’ll win.

  22. Max G.

    An attorney told me that in the event of a particular type or smart lawsuit, the claimant will sue you, your LLC, and the Lender. The Lender will learn at that time that you’ve changed out of title and immediately call in your loan, possibly to prevent wasting resources on considering the suit. Anyone is welcome to tack on any knowledge on this!

  23. William SaintAmour

    What about doing a master lease to your llc, spelling out the liability that belongs to the llc, and have the llc be the entity actually doing the rental agreements with tenants? Umbrella insurance of your own is still wise, but would it give another layer of protection to you and your asset?

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here