Should I put my rental properties under an LLC?

[Jerome Joseph Gainer Jr]

I own a property in Miami Beach that I rent out short term and a property in Austin that I rent out long term both with mortgages.  In addition to those, I manage my Mother in Laws long term rental in San Antonio which she owns outright and will likely transfer to my name.  Finally, I am looking to purchase a property in Lake Tahoe to rent out short term when we aren't using it.  

I was told by Quicken loans that they will not finance a property with an LLC as the owner, that it must be personally owned.

My questions are these:  

Are there tax benefits to putting all these properties under an LLC? Together, they would probably net no more than $20000 per year after all expenses.

Do I need the LLC to actually own the properties or can I just report all income and expenses through the LLC?

Is anyone doing something like this and if so, what are the benefits to you?

Thanks,

Jerome

[Scott Smith]

I work with a lot of people who end up finding a way to get both the LLC for asset protection while still holding onto their beneficial financing options. Instead of losing your protection to keep financing, or finding financing options with higher interest rates, this can help you keep the best of both worlds.

There are two types of transfers that can potentially raise an alarm about the due on sale clause: (1) the transfer to an LLC and (2) the transfer to a trust. A transfer to an LLC will trigger the clause and should therefore be avoided even though banks are hesitant to ever foreclose as long as the note is being paid. Even with the note being paid, the banks will still send threatening letters. This issue can be avoided completely by transferring the property into a land trust.

While a transfer to an LLC will cause alarms at the bank and prompt them to send you a letter, a transfer to a trust will not. A transfer to a trust is exempt from due on sale violations since banks will view transfers to a trust as an estate planning tool. You should not even receive a letter from the bank.

This article can explain the general process of taking a property into your own name and transferring it into the Land Trust before assigning it to the LLC. The added benefit of this process is that you can also have your attorney sign the public records as "Nominee Trustee" before assigning yourself as the "Trustee" once the Trust has been established. It means your name does not appear on public record for that property. You will still appear on most LLCs without additional steps being taken, but you can make the land trust appear anonymous with this strategy while getting access to the funding you are looking for.

If you have more questions on this feel free to reach out to me. This isn't legal advice, just my opinion as a real estate investor.