Putting rentals in LLC

[Chris Drury]

Hi BP team
I am looking at purchasing 4 properties in the next 30 days but would like to put them in an LLC with my investment partner. Primarily to protect my other assets but also so we can claim expenses for taxes and not have to deal with the passive loss limitations. (I am not real estate professional). I am still going to have to personally guarantee the loan but that is ok.

Most of the banks require putting it in one of our names and then moving it over through a quit claim deed. I am not too familiar with the process and wanted to know what is involved or if this is the correct process.

I have 20% down and we are ready to proceed but I wanted to make sure I had the process down with an exit strategy for moving to the LLC. I have a good relationship with the settlement firm and may ask for a discount if they are needed twice to process the quit claim.

Please offer any direction.

Thanks
-Chris

[Stan Butler]

Hey Chris, we own many properties and spread out ownership across several LLCs. Here are some of my experiences:

* We have only used financing from Private Lenders and Community Banks (Portfolio Loan). We have always closed in the name of the LLC.
* If you have to close in your name first, it seems to defeat the purpose because now you have a paper trail with the title in an individuals name.
* Lenders will require a personal guarantee on the loan no matter how you title it.
* When you setup your LLC, you can also go the extra step of finding an out-of-state person to be your Registered Agent. Im not sure how much this helps, but its an option.
* If you really want to go further, you can look at using Trusts to hide ownership. It all just depends on how far you want to go...
* We have insurance through traditional carriers and they have covered the property with the LLC on the title. I think this is getting harder to come by. I have looked into a blanket LLC policy but it was prohibitively more expensive.
* Sometimes it can be a pain to setup utilities for a residential property in a business name. Some of our utility providers used to ask for much larger deposits.

Thats my brain dump for now.... Im sure there were other nuances...