Llc for AirBNB/STR

[Matthew Kauk]

I have an AirBNB in Savannah GA that I bought in August of 2023 it coming on a full year now and I'm looking to refinance.

At what point should I move the STR into an llc?

Should I do this before I refinance my home or after I refinance?

Is there a length of time that lenders like to see before they lend to an llc?

I've also filed my personal 2023 tax returns and have those available with the STR income included.

[John Underwood]

You don't even need an LLC for one mortgaged property. Just get the correct insurance.

You can get an umbrella policy if you want better protection than a poorly setup and ran LLC will give you.

[Sarah Kensinger]

This should have been done either before you closed or right after! If you plan on refinancing within the next 6-12 months, you might as well wait and hopefully you'll be fine. If not the STR needs to be placed in the right entity ASAP, without it you're wide open for a lawsuit! Especially the petty ones that are a complete waste of time, money, and peace of mind!

[Michael Baum]

Hey @Matthew Kauk, I agree with @John Underwood. Not really necessary.

You will need a commercial loan refi with higher interest and maybe more down to cover it.

[Nathan M kiefer]

This depends on a ton of factors, mostly risk.

Without a doubt it provides risk mitigation if your property is in a LLC. Without that you can be sued personally for any issue within it on your str.

Its much harder for people to pierce the corporate vail and sue you personally if your property is owned and managed in a LLC .

Financing is one of the only drawbacks as it is a commercial process and banks usually like to see 3 years of a decent tax return.

We have 19 properties and all are in an LLC and in fact we only hold 2-4 properties in each LLC (all are owned by one parent company and done in one flow through parent company)to even further shield the liability that may/can occur on a property.

There is no doubt you are exposed to higher risk on many fronts if an investment property is held personally.

[Dan Thomas]

@Matthew Kauk

In my opinion pay the $300 an hour to consult an attorney and they will give you the best advice for your personal situation. If it isn't worth the $300 / hr to you than you probably don't need an llc and just get good insurance as suggested above.

[Andrew Steffens]

Agreed on it is not necessary and you will get more favorable terms during a refinance if you use your personal name. LLC's are more used by larger investors and people who do not qualify under their personal names and have to ue business purpose loans and they require the property be in an LLC and not an individual.

[Tanner Lewis]

Quote from @Matthew Kauk:

I have an AirBNB in Savannah GA that I bought in August of 2023 it coming on a full year now and I'm looking to refinance.

At what point should I move the STR into an llc?

Should I do this before I refinance my home or after I refinance?

Is there a length of time that lenders like to see before they lend to an llc?

I've also filed my personal 2023 tax returns and have those available with the STR income included.

You can just move title into an LLC at closing. Title will just do it with a deed of transfer, super easy and we do it all the time. Also there is no seasoning for time needed to move into an LLC, there are just seasoning requirements on cash out refinances, but most lenders have no restrictions on these after 6 months.

[Zach Edelman]

There are also ways/lenders that will allow you to transfer ownership of the property within an LLC simultaneously/concurrently with closing on the refinance.