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"Minimize Business Risk by Using a Limited Liability Company (LLC)"


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When managing your rental property business, the 4 most important things you can do to minimize litigation risk are:

  • Utilize a real estate LLC (limited liability company)
  • Avoid co-mingling of assets
  • Get good insurance coverage
  • Follow "best practices" when managing your properties


ADVANTAGES OF HOLDING PROPERTY IN A REAL ESTATE LLC


The first step to manage your investments like a true rental property business is to create a single-person limited liability company (disclaimer: if you're in a state that does not allow this, please consult with a property attorney in your area).

The main advantage of a rental property business LLC is that it provides corporation-like liability protection. Thus, your personal assets would be protected if you are successfully sued – the only assets you would have at risk would be those within the LLC.

As an added bonus, a single-person LLC also allows you to file your business rental tax deductions on your personal return. So it's very easy to manage.


LLC FORMATION TIPS


You'll want to form your rental property business LLC when you acquire your first property. Any attorney, or online service such as LegalZoom, can help you with this and it'll cost anywhere from $200-$350. And, you can form your LLC in any state you wish.

If you plan to acquire only a handful of rental properties (let’s say, 3 or 4), and hold them for only 10-15 years, then it probably makes sense to put all 3-4 properties under the same LLC because it's cheaper to have 1 LLC than several (initial creation costs, plus annual fees). The downside is that a single litigating tenant could theoretically go after all of your properties.

Alternatively, you could put each property into its own LLC to limit your exposure to 1 property at a time. However, as your real estate investing business grows, this can get expensive and cumbersome to manage.



BEST OF BOTH WORLDS: DELAWARE SERIES LLC


The best of both worlds is a Delaware Series LLC, which is what I utilize. With this structure, you have an umbrella limited liability company, with each property held in its own "series" under this umbrella as follows.


Delaware Series LLC



Since each series is independent of the others, theoretically your exposure is always limited to a single series even though all of them are under the same umbrella LLC. The advantage is that your cost is essentially the same as if you had 1 LLC, yet each property is singularly protected.

The downside is that this is a relatively new legal structure for a rental property business and so there is not a whole lot of evidence that the limited exposure per series would hold up in court.

In any case, these are just some things to think about. Definitely consult with an attorney to determine the best structure for your real estate investing business.


HOW TO HOLD TITLE IN THE NAME OF YOUR LLC


Ok, let me say that this is not as easy as it would appear, because mortgage companies will typically not make a property mortgage in the name of your rental property business LLC (even if you personally guarantee the loan). So your personal name will be on the loan, which means that your personal name must also be on the property's deed / title at the time of acquisition.

This is a major problem because the title must be in the name of your real estate LLC in order for your activity to be deemed as business activity. Otherwise, you could legally be considered an individual instead of an LLC, thereby putting your personal assets at risk. When an attorney tries to discredit your corporate status, it is known as "piercing the corporate veil."

So what you will need to do is transfer the title of the property from your name to the name of your LLC after the mortgage closing via the filing of a "quitclaim deed" (may be called something different depending on your state). Your attorney can do this for you and it will cost a couple hundred dollars.

You should wait a few months after you close to do this to give enough time for the original deed to be recorded with the municipality. So for a few months immediately after acquisition you will technically not be running the activity as a business.

Luckily, you will have good insurance coverage to close your risk gap in the meantime (make sure you let your insurance company know about the LLC transfer so they can update your policy accordingly).


WORD OF CAUTION WHEN TRANSFERRING TITLE TO YOUR LLC


Now, if you set up your mortgage so that the investment property taxes are paid out of an escrow account, there is a tiny risk that your lender will exercise the standard "due on transfer" clause when the title or deed is transferred to the name of your limited liability company. This means that after they get wind of the transfer they could require the entire loan to be paid off in, say, 30 days.

How would they know, you ask? Because after the transfer is made, the property tax bill that your lender receives will now have the name of your LLC on it instead of your personal name. This could throw up a red flag in which your lender may erroneously assume that the transfer was made to an LLC not affiliated with you.

One way to get around this is to pay the property tax on your own, although some lenders may not allow this. That said, I think the risk of your lender balking is very, very small.

And even if they do balk, chances are that you could explain the situation and they would be ok with it. Worst-case, you could simply refinance investment property with another lender that understands what you are trying to do. However, I have filed quitclaim deeds for all of my properties, even those with lender-managed escrow accounts, and I have never run into a problem.


"BEST PRACTICES" FOR DAY-TO-DAY PROPERTY MANAGEMENT


So now that you have a rental property business LLC and your property's title has been transferred to it (and your insurance policy updated accordingly), you can focus on the day-to-day aspect of managing your real estate investing business.

The key is to separate all your real estate activity from your personal activity as best you can. That means all documents (except your mortgage docs) should reflect the name of your real estate LLC and not your personal name.

Also, you should not use personal accounts for your real estate activity...this is called co-mingling of assets, and it's a key focus for any litigating attorney attempting to pierce the corporate veil. So, get separate accounts.



Tips for Managing Your Real Estate Investing Business

Rental Property Business



Beyond that, there are other things you can do throughout the course of running your rental property business that can act as preventive maintenance to avoid getting sued in the first place, for example:

  • Minimize the odds that one of your tenants gets hurt by promptly eliminating unsafe conditions such as loose steps or hand railings.
  • Disallow tenants to make amateurish repairs for you in order to receive money off the rent due.
  • Always use licensed, bonded, and fully insured contractors for large and/or potentially hazardous repairs.
  • Carefully screen tenants to minimize the odds of renting to a frivolous lawsuit predator.
  • Maintain as much anonymity as you can in your rental property business. One easy way to do this is to get a P.O. box from your local post office for your business (i.e., have the PO box in the name of your limited liability company). This costs about $60 per year.



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57 Responses to Minimize Business Risk by Using a Limited Liability Company (LLC)

  1. bbobbo says:

    regarding separating personal assets from llc assets,

    1) how do you transfer assets into and out of the llc? is it as simple as transferring funds from the llc account to your personal account and vice versa, or do you have to do something like pay yourself a “salary” from the llc?

    2) can you make mortgage/heloc payments directly from llc accounts, or should you transfer funds to your personal accounts first (since the mortgage/heloc is under your name, not the llc)?

    3) can you use a single account for all llcs, owned by the umbrella llc, or does each series need its own account?

    thanks a lot for your useful site.

    • alank856 says:

      Hello,

      Thanks for visiting my site. If you are asking about the income you receive, if it is in a LLC then it will all pass through your personal annual tax returns. If you are looking to draw a salary from the LLC, I advise you to contact an attorney to discuss the best approach for your needs.

      If you are looking to put the property itself in the name of the LLC, you will need an attorney to do this. In my state the filing is known as a “quit claim deed” but it might be called something else in your state.

      I’m not sure about your last 2 questions but again, although I know enough to be dangerous, I would advise you to contact a professional accountant and attorney because all states have different rules and regulations to abide by.

      Good luck!

      Alan

  2. bbobbo says:

    thanks for the response. i was more asking about separating funds in regards to liability and “piercing the corporate veil”.

    for instance, at the beginning stages, if the income from rent isn’t enough to cover all expenses and i need to contribute personal funds, could i just transfer funds from my personal account to the llc account, or would i have to write a personal check specifying “equity contribution” to the llc?

    likewise, if significant funds have built up in the llc account and i want to withdraw some funds for personal use, can i just transfer the funds, or would i have to write an llc check specifying “profit distribution”?

    i’m just curious how you yourself do this in your own real estate business. likewise with my last 2 questions: how do you handle it in your own business?

    further on down the road, i will definitely consult an attorney and an accountant, but i just want to know how things work before i get that far.

    thanks again!

    legal note: i understand that anything you write does not constitute legal advice and i absolve you of any liability regarding my own financial decisions.

    • alank856 says:

      I don’t do what you are describing so again just ask your accountant (which you must have if you invest in property…if you don’t have one, get one before you acquire your first property).

  3. Heidi says:

    I’m paying cash to buy a property (for getting a good deal). After closing the escrow, I want to cash out some money. My question:

    Should I form a LLC before purchasing?

    If I do this, later can I use my personal credit to get a loan for this “LLC owned” property? What else should I pay attention to? Thank you very much!

  4. Don D says:

    Scenario: You own a rental property that is underwater (you owe more than it is worth). It is being rented but at only a fraction of the mortgage payment. Can you transfer this property to a LLC to protect your personal assets in case you have to default on the loan in the future?

    • alank856 says:

      Hello – thanks for checking out my site. I don’t think transferring the property into an LLC will achieve the goal because even though the title will be in the name of the LLC, the mortgage will still be in your personal name and it is the mortgage company that would foreclose. I really don’t think lenders can dip into your assets though, they will simply take possession of the property via the foreclosure process and then sell it to recoup as much of their money as possible. I think your worst case scenario would be losing the house, but that’s where it would stop. Just keep in mind that I am no lawyer, this is simply my opinion of how it could play out. If you’re really worried about it, I’d talk to a legitimate attorney. Good luck!!

  5. sandy kim says:

    I reside in MD, and have rental properties in VA and PA that I had been managing that I own. Would I be protected if anyone got hurt at any of the properties, if I formed LLC Property management company in MD for those out of state properties, without transferring the real estates to LLC? In another words, if someone got hurt, if I claim my property mgt company is worth 10K, then would that be the max that they can sue, and not come after those out of state rental house where they were injured?

    • alank856 says:

      Hi Sandy,

      Thanks for checking out my site. First, I must advise you that I have no legal training whatsoever so I would DEFINITELY check with an attorney. That said, my gut feeling is that what you are proposing will not protect you. If someone is injured on a property, the owner of that property is the entity that would be liable. The property management company you are proposing would not be the legal owner, and therefore would not be involved. The person or company whose name is on the property’s title is the legal owner – period. And only the legal owner would be liable. I am thinking that the only way your idea would work is if you actually transferred the property titles into the name of the property management company so it would then be the legal owner.

      Good luck!

      Alan

  6. marcellus says:

    i have two condos that are free and clear. would it be wise to set up 3 llc one for each unit and the 3rd llc be a property management and should i put the property management name on the title of the other two llc.

  7. Jatin says:

    Hi Alan,

    If a property owner rents a property to a tenant, can the owner indemnify himself / herself against any injuries / etc that may happen on the property in the lease agreement?

    Thanks,

  8. Bob says:

    I have a rental property in ID; it’s in my own name; can I convert that to an LLC without a huge hassle?

    Also–If I buy 2 new properties; say one in UT (where I live) and one in NV; do I need a separate LLC for each state; or can I pick one state and use the same LLC for both states??

    Thanks!!

    • alank856 says:

      Hello,

      Thanks for checking out my blog. Yes you should be able to transfer the title / deed of the property into your LLC. In my state (NJ) this is called a quitclaim deed but might be called something else in ID. Any attorney can do this for you…it’ll cost a couple hundred bucks but will allow your LLC to be the legal owner of title. Also, you can put any property from any state into the LLC, the geography of it does not matter.

      Thanks,

      Alan

  9. Anna says:

    I am considering buying 3 rental properties using only cash. Should I set up an LLC prior to this purchase so that these properties will fall under the LLC? Thanks

    • alank856 says:

      Hi – thanks for checking out my site. Yes you should definitely set up the LLC prior to buying the properties. Since you are paying cash, there is no issue with the mortgage company refusing to put the mortgage (and by default) the title in the name of the LLC. You can simply put the LLC on the title from the get-go.

  10. Robert Moss says:

    Can you please explain how you handle your mortgage payment each month? Since the property is now titled to the LLC but the mortgage is still in your name, how do you rectify paying the mortgage with personal funds and account for it on the business/LLC side?

    Also, how did you handle the initial “seed” money that started your LLC? Do you just transfer money from your personal banking account to the LLC account without any type of declaration of it being a “business” or “equity” contribution?

    • alank856 says:

      Hi Robert – thanks for checking out my site. I simply pay the mortgages from my LLC bank account each month. I do not use personal funds to pay the mortgages, even though my personal name is on them. From a liability perspective it doesn’t matter. Although it would be ideal to have the title AND the mortgage in the LLC’s name, my attorney said that the important thing is that the title is in the name of the LLC. As long as the title is in the name of the LLC, irrespective of what name the mortgage is under, from a liability perspective the property is considered owned by the LLC. Now, keep in mind that I am in NJ. I don’t know if this is the same in all 50 states. I would assume it is but I have never researched it.

      Regarding the seed money I used to get started, I used a HELOC on my pwesonal residence to fund the down payment, and then refinanced a few months later to remove all ties from the rental property mortgage to the HELOC. Again, the improtant thing to limit yuor liability is the title, NOT the financing.

      Hope that helps…

  11. Greg Chase says:

    Hello, this is very informative site.

    I also want an LLC for asset protection and I apologize if this has been asked before (although I could not find the specific/exact question):
    Details – three properties all in MD, I live in PA. I have owned all of them for 20+ years all in my name. One property has a mortgage, the other two do not. I plan on paying off the final mortgage before the LLC transfer. I want one LLC for all properties. How do I perform the transfer to an LLC exactly? What fees should I expect? I have heard that keeping 1% ownership in my name and 99% in the LLC is normal, what does this do? Thank you.

    • alank856 says:

      Hi Greg,

      Thanks for reading! In my state (NJ) the specific filing to transfer the property from a personal name to the name of a LLC is called a quitclaim deed. There are a few states where it’s called something slightly different but I’m guessing PA is not one of those states. Mt attorney charged roughly $200 to file the quitclaim deed and it took about 6 weeks to get recorded, etc. I’ve never heard the 1% ownership rule so can’t help you on that one.

      Good luck!

      Alan

  12. H Carl Sturcke says:

    Very helpful information. I’m just starting the process of setting up an LLC for rental real estate that I own, so I can’t offer any advice or results of the process.

  13. HarryT says:

    Alan, thanks for this informative site! I just purchased a rental home for $130k and want to quitclaim it to an LLC. Then I want to sell 49% of the LLC to an investor for $90k. Can you tell me how I should state the initial captial contributions of us both in the operating agreement in this scenario?

    Secondly, once I form the LLC to hold the property, do I need to file for a separate business license and tax permit?

    Thanks so much in advance!

    • alank856 says:

      Hi Harry, thanks for checking out my site! I’m not sure about the first pat of your question as I have never done what you are planning. It sounds fairly complex so I would encourage you to talk to an attorney about it. He she will be able to draw up the necessary documents and will also be able to do your quitclaim transfer. I never had to do any additional filings after doing a quitclaim deed, but I don’t know if it’s the same in every state. Good luck!

  14. Mitch Brown says:

    Hi…this is a great blog. What tax benefit does forming a LLC offer? I have been using Schedule E for 20 years and have accumulated a lot of losses that I have not been able to deduct because of my earned income level. Will an LLC help with that? Thanks!

    • alank856 says:

      Hi Mitch, thanks for checking out my site! Yes an LLC allows you to deduct your property expenses from your total income because it passes through your personal income tax filings, expenses like mortgage interest, property taxes, insurance, mileage, depreciation, and more. I’ve never held property in a different type of entity so I cannot compare any other options. But even if I could, your specific situation involves a lot of variables and numbers that I am not privy to, so it would be impossible and irresponsible to offer specific advice. I strongly suggest you talk to your accountant about your best course of action. And if you don’t have an accountant, get one NOW! Good luck!

  15. Gentle Ben says:

    Excellent site! I’m just starting in this and finding valuable information.
    My situation is somewhat different in that I’m starting unintentionally. I’m being transfered out of state for work, unable to sell my condo, but I have approval from the HOA board to lease.
    My question then is, can I not get the same tax benefits from the title being in my name vs. an LLC? My fear is that my HOA board gave me personally permission to lease my unit, not an LLC that I would have to create later.

    • alank856 says:

      Hi – thanks for checking out my site. For tax purposes it doesn’t matter whether you hold the property in your own name or in the name of a single-member LLC. For a single-member LLC, the tax variables associated with the property will flow through your personal tax return so there is no difference. Hope that helps!

  16. Davey8787 says:

    Hi Great blog.

    I’m in the process of buying in NJ and I want to put the property in an LLC. I’m having major problems with the banks giving me a loan. I am very interested to read that you can change the title post closing but I have one question regarding being able to claim the mortgage inertest against rental income.
    Can I still make this claim on my tax returns as the mortgage will still be in my personal name but the property is being held/owned by the LLC.

    Thanks again for the great info.

    • alank856 says:

      Hello – thanks for your kind words! Yes you will still claim your mortgage interest expense as a tax deduction because your single-member LLC taxes flow through your personal tax return. So whether the title is in the name of the LLC or your personal name, the tax treatment is the same. As an example, my mortgages are in my personal name and my titles are in the name of my LLC Panda Realty Group, and I have always been able to claim the deduction. Hope that helps!

  17. Vincenzo Halifax says:

    Does your website have a contact page? I’m having trouble locating it but, I’d like to send you an email. I’ve got some suggestions for your blog you might be interested in hearing. Either way, great blog and I look forward to seeing it expand over time.

  18. Davey 8787 says:

    Hi

    My Attorney has told me that if I do the personal name and LLC transfer in NJ then I have to pay a transfer tax which can be quite substantial. Is that something you have found? If not can you put me in touch with your attorney as mine doesnt really seem to know what he is doing.

    Thanks again

    • alank856 says:

      That is not correct – there is no transfer tax in NJ. Just find an attorney that specializes in NJ real estate transactions and you’ll be ok. Check the phone book, search Google or ask your title company or real estate agent for a referral. My attorney recently retired.

  19. yvette rashid says:

    I formed a Florida corporation and bought 10 rental properties how do I file with IRS??

  20. Scott says:

    Great site! My wife and I are buying a place and will be renting out our current house. We are forming an LLC, do we want member, manage, single, partnership or corp. The house is in her name, she bought it 8 years ago. We got married 1 1/2 years ago. The new house will be in both our names. Thanks.

  21. Cecilia says:

    Great blog Alan!

    I just bought an Investment property (condo) and created an LLc, I’m ready to quitclaim deed soon, however a friend attorney suggested warranty deed instead, because the coverage of the Title Insurance will be terminated upon the transfer. 1.- How can I avoid that?
    2.- Is it safe that the LLc name is the same as the investment property address including unit number? If not what would you suggest so the bank never finds out. I don’t want to have the LLc same as my name. Should I? Thanks!

    • alank856 says:

      Hi Cecilia,

      Thank you for checking out my site. That’s a good question. I believe title insurance is only in effect to make sure the title is clean when you purchase a property. Once the transaction is finished I don’t think title insurance is still needed, in which case it would not matter if this coverage gets terminated upon transfer. You should wait at least 90 days after the deal is closed to transfer the title into your LLC in order to give it enough time to first be recorded in the county clerk’s office (or whatever it’s called in your locale). So again, by the time you transfer the title your need for title insurance should be long gone unless I am missing something here. Regarding your second question, I think naming the LLC as the property address would be just fine. Good luck!

      Alan

  22. Technopeasant says:

    In Oregon I cant form an LLC WITHOUT commercial financing. Yes, even on a 2-4 unit plex. These hardmoney loans are 2-4% higher than I would personally quailfy for. I dont think Im missing something because this is from a RE atty and my mortgage broker. In such a state, is there a way to quitclaim a 4-plx into an LLC and not be forced into a higher rate loan?
    Thanks!

  23. question for you says:

    Is it best to have additional homeowners insurance on your rental properties in the state of Nj and have clauses in the lease that the landlords are not resposible for any loss and are free and clear of any damages to any person in the rental home at all times. Thanks for your help I have two rentals how do I go about getting mortgages set in llc name is this possible and does it provide more protection then the additional insurance and clauses in the lease? There is a lot of uncertainty here and just want to be sure we are doing the best thing to protect ourselves. Thanks so much

  24. Brian Heinz says:

    I have an existing Family Limited Partnership. This FLP has an LLC as the general partner and a our Irrevocable Trust as the Limited Partner. This Partnership is going to purchase a 2nd rental property. Can I form a Single Member LLC, purchase the property in this name and then Gift deed the LLC to the Partnership? Or is there a better way of doing this? All the time keeping an added layer of asset propection between this new property, the partnership and its other holdings? If this works, I assume the existing Partnership management agreement would then cover the management of this new LLC property?

    Thanks

    Brian Heinz

  25. marianne says:

    Great informative blog. I have a different situation. We have two homes on one property one of which we rent out. We are in the process of LLC. Should we subdivide and make the one house the Llc? We have a mortgage on the first house that we rent out. thanks

    • alank856 says:

      Hi Marianne,

      Thanks for reading! Your situation is a little different and there’s a lot of extraneous circumstances but I’ll try my best to help. First, if both houses are on the same lot, then they are probably on the same title / deed which would essentially make it a duplex. I think subdividing is the right move. Make one house the rental and the other your home. Put the rental in the LLC. This will give you maximum flexibility down the road, and if you plan to sell at some point, you will almost definitely get more total profit by selling 2 totally seperate properties instead of 2 houses on one lot which is essentially a duplex. Hope that helps.

      Alan

  26. SCOTTCH says:

    GREAT SITE – I HAVEN’T FOUND ANY BASIC TIPS OR INFO ON THE POSSIBLE TAX WRITEOFFS FOR THE INITIAL INVESTMENT IN A RENTAL PROPERTY. I WILL BE USING 25% FROM MY IRA, 15% CASH, 50% CASH FROM HELOC, 10% CREDIT CARDS TO FUND THE PURCHASE AND INITIAL EXPENSES. I’M PLANNING TO SPEAK TO A TAX ACCTNT. BUT WOULD APPRECIATE ANY TIPS PRIOR TO THAT.

    • alank856 says:

      Hi,

      Thanks for reading. I believe you can write off your interest expense on the credit card and HELOC balances annually for as long as you are carrying the balances / making payments (much like a mortgage). There are no writeoffs that I am aware of for cash and the IRA. Definitely confirm with your accountant thought.

      Good luck!

      Alan

  27. Teresa says:

    Great information. Curious why you file your series LLC in Delaware vs your home state of NJ. Are there advantages for filling a Delaware Series LLC vs a Series LLC in your home state?

    Thanks for sharing.

    • alank856 says:

      Hi,

      Thanks for reading my blog! Yes the reason is because Delaware has favorable corporate tax laws, which is why roughly 80% of all companies in the US are incorporated in DE irrespective of where they are physically located. Plus, at the time I formed my company Delaware was the only state offering the series LLC structure. Hope that helps.

      Alan

  28. rsjhunter says:

    How do you feel about having a Parent LLC over a Child LLC? The Child LLC will not be in our name but instead be in the Parents LLC name.

    we have 3 rental properties in one LLC and have created a Parent LLC to the child LLC (which holds the rental property)

    Do you feel this offers more protection to have to break thru the parent before going to child LLC? Also if so, how do I handle banking do I list it in child LLC or Parent LLC?

  29. george says:

    Great Blog Alan!

    I am in the process of buying a condo in NJ. I plan to form an LLC to purchase the property before closing, so that ownership, Insurance, and Title insurance are all in the name of the LLC upon closing. I’ve been advised to also set up a small business checking account to manage all funds, which helps protect against the potential for piercing the corporate veil. What is the best way to put money into the LLC account for the purchase of the property? Is it an equity contributions? loan? etc. Any other noteworthy suggestions?

  30. Monica says:

    I am thinking of putting both of my properties into my LLC. But, I have mortgages out for both of them. I’m a little confused when you stated about paying the taxes after the title transfer?
    Would it be wise to contact my lenders before I transfer to my LLC?
    I want to advoid them asking for full payment of the loan. How would I get around that. I do understand that the mortgage would stay in my personal name. Please advise..

    • alank856 says:

      Hi – thanks for checking out my site. No you SHOULD NOT contact your lender and let them know about doing a quit claim transfer. As long as you are NOT paying taxes and insurance out of an escrow, your lender will never know about the transfer of the title into your LLC (90% or more of the lenders out there wouldn’t care anyway, but why chance it?). If you are paying taxes and insurance from escrow, remove these escrow payments from your mortgage account before you execute the title transfer. I’ve never had any issues whatsoever.

  31. Karen says:

    Great Blog. My husband buys commercial properities in LLCs; some with partners, some without. If he buys a property in an LLC formed before our marriage, is that property community property? We live in a community property state. (There’s no prenup.) Thanks.

    • alank856 says:

      Hi – thanks for checking out my site. Yes that’s a good question but I’m not sure the answer because each state has specific laws and such. Your best bet: pay the $75 or so for a consultation with an attorney who practices in your state. Good luck!

  32. Becca says:

    If I rented a house and the lease was signed in our personal names and then an LLC was obtained after the original signing can that lease be held invalid since the rental property is now under an LLC but the deed is still in our personal names?

  33. joe says:

    Hi thanks for the great blog.

    I’ve stopped paying on my investment condo two years ago. My mortgage company seems in no hurry to foreclose. I have a renter and am collecting rent.
    would it be possible to transfer the condo to an LLC to avoid future tax bills or to protect myself in other ways? thanks.

  34. Kieran says:

    I want to buy rental property. I have an LLC formed to purchase rental property but have not done so yet. I have cash in the LLC that wife and I contributed. We dont want to pay cash but would like to structure the LLC to fund the property with a loan using the cash. For obvious reasons we will “indirectly” be paying cash but want to believe it is better to set up a loan agreement using AFR(applicable fed rate)that will be more beneficial to wife and I a two member LLC. thanks

  35. Sherry says:

    Hi: So..we have 1 condo that we are going to rent – have set up an LLC. My loan documents state lender is to be notified upon any changes. My attorney advised we notify the lender prior to filing a Quit-claim deed to transfer into the LLC. (My accountant advised – not to notify Lender). I did notify – was told that only commerical property can be tranferred to an LLC with advancement of the loan -ie, payoff.. So now…I’m stuck. Don’t know how to proceed. Would really appreciate your advice. Great threads

  36. Bobbie says:

    Great blog. Just curious on how to file taxes for Real estate rental income using a LLC. Should the rental income be put in Schedule E (Rents and Royalties) or in Schedule C (Profit and Loss from a Business)

  37. Larry says:

    I own several rental properties and want to move each to a separate LLC and one to an S-Corp or an LLC using the S-Corp IRS rules. I was told I could get better self-employed Health Insurance rates thru a corporation. If the leases are in my name and the property titles are LLC, who gets sued? If you get sued in Texas, your homestead and personal vehicles are typically protected so what is the personal risks if everything is in LLCs? Would it be better to keep most assets in LLCs all around? Also, could an umbrella policy make economic sense over LLCs? – I think I pay about $60 a month for 4 houses and 1 Million coverage. Of course, lawsuit predators will pursue those that have liability coverage and walk away from those that don’t.

  38. Shaneka Batres says:

    Too often, landlords do all the talking in a feedback situation, something I like to call the dreaded Landlord’s Monologue – and that is guaranteed to cause trouble. It is vital to engage the tenant in open dialogue; to seek to understand his or her thought processes and reasons. If you don’t listen to them, you may not get a clear understanding as to why the tenant is behaving in this manner. You will also increase the likelihood that they will not listen to you!

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