Using rental property as collateral for fix and flip

[Randy Landman]

I know that the topic of LLC or not and dealer vs investor have been done to death, but I still find myself with questions. We currently hold our rentals in our own name. I had planned on moving them to an LLC at some point in the next couple of years. Right now we are in the process of starting a fix and flip business. We formed the LLC for that business and planned on it being completely separate from the rental business. We found a bank to get a line of credit from using our rental properties as collateral. The line of credit will be in the LLC fix and flip businesses name with a personal guarantee by us. I thought that the bank was ok with the collateralized rental property remaining in our name. Maybe I didn't ask them that question correctly. Now that we are getting down to the closing they want us to transfer the properties into the LLC name, since that is the name on the line of credit. That will put our buy and holds and our fix and flips in the same entity, which was not my intention. But I need the line of credit and that's what the bank is requiring. How do you structure it when you are using your rental property equity as collateral to fund the fix and flips?