Forming an LLC for my business

[Patrick Reisinger]

I currently have 5 rentals (looking to grow) that are financed conventionally. That being stated, my lenders will not allow for me to transfer title into an LLC. Since I'm not able to transfer any of my 5 rentals into a respective LLC, what would be the purpose of creating an LLC for the overall business in the first place? What would be the difference between establishing an LLC for my business compared to keeping it as a sole proprietorship? Any advice would

be much appreciated.

Thanks!

[Jack Medford]

If you are not able to transfer your current properties into your LLC then there really isn't much use for it. However, you can still form an LLC and plan to purchase all future properties within it. This will mean commercial loans, however, as opposed to conventional.

Depending on your risk tolerance you can also try transferring title to an LLC even without the bank's permission. A lot of investors talk about putting conventional (personal) loans on a property and then transferring to an LLC without consulting the bank. Usually the bank is happy to just keep getting paid, but they do have the ability to enact the due on sale clause if they want to. That is where the risk comes in.