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Updated over 4 years ago on . Most recent reply

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Steven May
  • Real Estate Agent
  • Kansas City, MO
249
Votes |
257
Posts

Putting Properties form personal name to LLC

Steven May
  • Real Estate Agent
  • Kansas City, MO
Posted

As I move into 2021, I plan to put my properties in LLCs - they are currently in my personal name.

Yes, I know to get in touch with a local attorney based in real estate law - I plan to do so to help set up the LLCs but want to hear from you the individual investors.

Quick background: I get W2 income from being a Registered Nurse and am a licensed real estate agent

I plan to put the properties in LLCs basically for the asset protection. To reduce my liability if negative events took place at a property with a tenant.

Some questions I have:

1) Do you put each property in a separate LLC? Also, do you have a separate "main" LLC that each "property" LLC pays too

2) I know all about tax depreciation and what not, but what is the biggest difference in taxes when a property is in a LLC vs personal name

3) have you had difficulties in refinancing when a property is in a LLC and have you had conversations with your lenders when you transition the property

4) Do you get each LLC insured or is there a umbrella policy?

5) are there any unexpected costs or annual fees you didn’t expect?

6) Does anyone deal with putting rent income into a whole life insurance policy

This is a smaller portfolio. 2 SFHs and 2 duplexes.

Would love to hear experiences from other investors and what I should know! Any advice is appreciated. I am based in Kansas City, MO. Thanks

  • Steven May

Most Popular Reply

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1,220
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Mike S.
  • Investor
  • Broward County, FL
933
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1,220
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Mike S.
  • Investor
  • Broward County, FL
Replied
Originally posted by @Steven May:
1) Do you put each property in a separate LLC? Also, do you have a separate “main” LLC that each “property” LLC pays too

Each property has its own single member LLC, that is owned by a WY holding LLC to get its charging order protection.

I do have a property management C Corp that is managing each property for a 'fee'. I can then use the C Corp to deduct many expenses and also get all the fringe benefit available from a Corp.

2) I know all about tax depreciation and what not, but what is the biggest difference in taxes when a property is in a LLC vs personal name

No difference in taxes (with the exception of the property management Corp that needs a separate tax return and that get some other tax benefits).

3) have you had difficulties in refinancing when a property is in a LLC and have you had conversations with your lenders when you transition the property

Yes, refinancing in an LLC is almost impossible for conventional loan. Some lenders will accept that you move the title into an LLC after the refinance, but they will need it under your name during the refinance. Or you can go with a commercial mortgage, but the rate will be higher (around 1 to 1.5% up) and the term usually shorter.

4) Do you get each LLC insured or is there a umbrella policy?

Each LLC is insured. Getting an umbrella that will cover each property is tricky as most regular umbrella will only cover property under your name.

5) are there any unexpected costs or annual fees you didn’t expect?

no

6) Does anyone deal with putting rent income into a whole life insurance policy

I use maximum overfunded permanent life insurances. Depending on your needs Index Universal Life may be more rewarding that Whole Life, but both are complex products that can be very powerful in increasing your yield if used properly.


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