Transferring property from my name to LLC

[Will Stahl]

Hey everyone, 

I'm currently in talks to buy 3 SFH rental properties. My partner and I will be splitting the costs 50/50. There's a bank that will finance them at 15% each but only if they're purchased personally rather than in an LLC. If I purchase them in an LLC the bank will require 25% down per property and that sours the deal for us. I'm curious what others would suggest to allow us to purchase the property in my name / both mine and my partners names but still protect our personal assets. I have a few thoughts but have never done any of these personally.

1) I buy the property in my name and quitclaim deed the property to an LLC that is owned by me and my partner.

Concern: I'm afraid that since the mortgage is still in my name personally that if I was sued they'd find a way to come after my personal assets. Is this possible? There is a due on sale clause in the contract. How concerned should I be about this? I hear they never exercise this clause as long as the mortgage is performing.

2) We buy the three properties in our own names and take out a large umbrella insurance property so if we are sued we are covered.

Concern: The Insurance company finding a way to not have to cover us for one reason or another in the event that we get sued thus putting our personal assets at risk.  Or not having enough insurance / the right insurance for the reason we're being sued.

I'd really appreciate everybody's insight. I am going to be speaking with my lawyer about this but I'd like to go in there with as much knowledge as possible.

Thanks,

Will