LLC Questions for newbie investor

[Gary Grossman Jr]

Hi guys! Newbie here... currently I live and own 1 rental property (SFH) in New Jersey and looking to buy more doorsteps by EOY. I am in the infancy stages and doing a lot of research/reading. I have two questions regarding LLC:

1. Can anyone find out the name of LLC owner in the state of NJ?

2. I have a conventional loan in my personal name for my rental property. If I decide to create an LLC now, what steps should I take (if any) to put that loan in the LLC name?

3. Do you recommend I create an LLC before buying my next property?

Thanks for your help in advance! 

[Kevin Sobilo]

@Gary Grossman Jr

1. An LLC's purpose isn't to obscure who owns it. Its simply for liability protection. That said, it won't be obvious who owns it, but I'm sure anyone can find out. Like I said, hiding your ownership isn't the purpose of an LLC.

2. You will not be able to move a conventional loan to the LLC. What people typically do is transfer the deed to the LLC and keep the loan in their own name. This provides liability protecting in case of a lawsuit. People typically don't even tell the lender of the change because in theory the lender could call the loan due based on the "due on sale" clause, but this is exceedingly rare from what I understand.

When your LLC is up and running you won't be able to get conventional conforming fannie/freddie loans under the LLC anyways. You will be looking at other kinds of loans like portfolio loans from small community banks with very different terms. Often variable rate 15-20 year loans at maybe .5-1% over prime. Also, you will have to personally guarantee the loans. So, you will still be responsible, but they won't show up on your credit report.

3. Whether to use an LLC or not is very subjective. I have one, but I also don't think its a necessity. I think people can operate under their own name just fine if they get themselves umbrella insurance to cover them for liability. The costs to get and maintain an LLC vary a lot from state to state. So, that plays into the equation as well. In a state where an LLC is cheap, its cheap insurance against liability.