Pros and cons of moving property into LLC

[Brittany Edwards chu]

Hello

My husband and I are under contract on our first multifamily and bc of the conventional loan we can't get the loan under an LLC. So we will have to title over to an LLC after close. My question is should we do it? Our lawyer cited us the pros and cons, and I was surprised that we will not be able to refinance as the LLC. also that there have been instances where a property was moved over to an LLC, the lender found out, and then made them refinance into a commerical loan. I've spoken to my insurace broker and he suggests just getting a good umbrella policy to cover yourself, as an LLC will still leave personal assets vulnerable. Generally people say its better to have the property in an LLC to protect yourself personally, but I am a little wary of running into complications. What do most people do? Thankful for any advice to be had.

[Nicole Heasley Beitenman]

While it is possible to trigger the due on sale clause, it isn't likely as long as the bank continues receiving their payment. 

I remember a podcast episode where the interviewee discussed how she bought properties subject-to, moved them into a trust, and renamed the trust after the buyer. So if she bought a house from Bob Jones, she'd open a trust called Bob Jones Trust; that way, the checks would continue to have the same name on them and the bank was less likely to call it due. It may be a principle to consider when naming your LLC. I am not an attorney and recommend consulting one before attempting this approach.

I also believe that, if the DOSC was initiated, you could just pull the property back out of the LLC. However, again, I am not an attorney and recommend consulting one.