Tranfering property to an llc

[Joshua Ryan Meador]

Hello all!

So I am in the process of buying a multi family.

This is my first one and I'm excited to pull the trigger finally.

The question I have and I have gotten a couple different answers, is when you finance a property based off a W-2 job they are loaning me the money. Not my llc. Correct?

So initially I can not close the deal with the llc securing the loan.

What kind of steps would you take to transfer the property to an LLC?

Also about how long Is the timeline for this?

If there are already tenants in there does that leave me exposed to litigation?

What would be the way you would approach this?

Are the laws different on this aspect in different states?

If so I am in Cleveland Ohio.

Thanks for your time my friends 🥂

[Scott Smith]

Originally posted by @Joshua Ryan Meador:

Hello all!

So I am in the process of buying a multi family.

This is my first one and I'm excited to pull the trigger finally.

The question I have and I have gotten a couple different answers, is when you finance a property based off a W-2 job they are loaning me the money. Not my llc. Correct?

So initially I can not close the deal with the llc securing the loan.

What kind of steps would you take to transfer the property to an LLC?

Also about how long Is the timeline for this?

If there are already tenants in there does that leave me exposed to litigation?

What would be the way you would approach this?

Are the laws different on this aspect in different states?

If so I am in Cleveland Ohio.

Thanks for your time my friends 🥂

 Hey Joshua,

I often recommend people just starting out in real estate investing to meet with an attorney who also has experience in real estate investing specifically. If you only had one or two of those questions I would love to answer them, but due to the number of questions you present I feel it's pretty safe to say that you would benefit from counsel as you kick things off. I would generally assume that you are purchasing the property in your own name - which offers the best rates, but you face quite a bit of liability. If there is a lawsuit either against you personally or the property, then whatever isn't covered by you (or your property) will spill over into the other. You can get an umbrella insurance policy, which can help be a first line of defense.

Another way to set up liability protection would be to purchase the property in your own name and then transfer it into a Land Trust, then assign the beneficiary of the Land Trust to the LLC. Most banks will use something known as the Due on Sale Clause to call their note (loan) due if you transfer directly to an LLC [generally because they want the assurance that they can hold you accountable for the loan you took out.] This is avoided in the case of the Land Trust because it is considered an estate planning tool, allowing you both the mortgage and liability protection for this property.

There are many different situations that can impact how this works out - you really will want the advice of an experienced attorney. I work with clients in these situations quite often - it can be pretty painful to learn these things the hard way.

This is not legal advice, just my opinion as a real estate investor.