Moving property to an LLC

[Derek Loveland]

As I begin seriously investing in real estate, I'm considering starting an LLC to both apply for business credit and hold properties as I build my portfolio. I've had some thoughts on how to get started and am looking for some feedback to help me see my blind spots.

My wife and I currently own a 3/2 SFR that we've been renting out since 2013. We paid it off a couple of years ago and took out a HELOC last year with an 80K line. At the time the house appraised at 126,000. We used some HELOC funds to replace windows and the roof on our primary residence and now owe 30K.

I would like to use the house to help establish the LLC and am looking at two approaches: 1) start the LLC, apply for a BLOC, use BLOC funds to purchase the house for the LLC, or 2) refinance the house and use the funds to pay off the HELOC, establish the LLC, and provide an initial operational reserve. I'm leaning toward option 2, figuring there's a way to move the house under the LLC once nothing is owed against it.

Any thoughts/advice is appreciated!