Can my wife buy a property and then hold it in my LLC?

[David Bridges]

I formed an LLC in Tennessee in which I'm the sole member, with the intention of starting a business flipping houses and then eventually transitioning to more of a buy and hold strategy with both long and short term rentals.

Slight change of plans- My wife and I would now like to acquire an Airbnb first. She would get a loan in her name(Only she would qualify, as I do not have a W-2 job), we would use money from my LLC for a down payment, and then hold the property in my LLC. After a while we would BRRRR the deal. Is this possible, or is it better to add her as a partner? Would we lose protection of the LLC? Is it considered comingling of funds? Any insight, attorney or CPA recommendations in the Nashville area is much appreciated.

[Greg Scott]

Trying to use an LLC and get a conventional loan often is counter-productive. The bank is unlikely to let your wife put a loan in her name using funds from your LLC. If you want to do that, you should move the money into her name ASAP and then wait a couple of months so that when you provide 2 months of bank statements to qualify for the mortgage, all the statements show the money.

If you want to BRRRR, you will need to get a commercial loan (higher interest rates, typically with a balloon) but if you want a conventional loan, you would have to move it back into your name and then wait 6 months.

Because of these complications, many doing single family will keep the property in their name and get good property insurance with a lot of additional liability insurance in an umbrella policy. You should be aware that in some states a single member LLC also doesn't provide much protection.

I've looked at converting a single member LLC to a multi-member LLC. My attorneys always said it was easier to just create a new LLC.