Transfer title of properties to LLC in PA

[Phillip Behrens]

Hi Everyone, been a long time reader of BP, but this is my first post.  I currently have 5 SFHs in the Pittsburgh area that I rent.  These are all currently in my name, i manage the properties myself and have no due on sale clauses on the mortgages i have on some of the properties.

After I purchased the 5th this past fall i started to think about how to more effectively run the properties. I wanted to start to treat this more like the business it actually is.  Before my personal and 'rental' income/expenses were very co-mingled.  I only had one bank account for everything.

I formed an LLC, got a separate bank account created and started to use those accounts for all transactions in relation to the rental business. I also did a number of things around getting better leases created, purchasing a property management solution, formalizing a business plan, etc.

Where i am at now is trying to determine if I should move the properties title into the LLC. I have an umbrella insurance policy right now to provide some liability protection. I am concerned long term about liability protection. I have spent hours and hours reading all the posts on BP about this topic. I believe i know all the PROs and CONs of moving into an LLC.

I have also discussed with a local PA attorney who recommended i move them into an LLC.

My last hold up is that in Pittsburgh i would need to pay real estate transfer tax on the properties. Each of these homes has a assessed value between 50-75k. I would cost me around 15k to transfer them into the LLC. If i did not have to pay the transfer tax i would have already executed the transfer. I am just held up on having to shell out the money when i would much rater use that to purchase another property.

I would be curious to hear everyone's thoughts on what they would do in this situation. I know this comes down to my situation and my risk tolerance, but knowing that I will still manage the properties, still puts some risk into my personal assets if I ever had a claim filed against the properties. Is it even worth considering moving them into the LLC since i will be managing the properties myself?

Thanks
Phil

[Jerry Kisasonak]

I was in the same situation. I just kept them in my personal name and put all the new purchases in the LLC. It would be easier bookkeeping wise to have them all together, but I don't personally believe it's worth the expense to transfer them. Like you said, it would be better to spend that money on your next acquisition. Just my opinion of course...