Rental as LLC or Individual Owner?

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On the surface that doesn't seem any different than transferring directly to an LLC - title is still being transferred. However, in the past I've had a number of clients purchase under a land trust with an LLC as the beneficiary. In Illinois and a number of other states, you can purchase under a land trust, which subsequently signs the mortgage, and you personally sign the note. Since the note itself is not public record, the only people who will know you own the property will be the trustee (ie a bank or Chicago Title Land Trust), your attorney, and the mortgage holder. Couple that with a good umbrella policy and that should be all the protection most people need.

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Wow, so many good responses here, thank you everyone!This is my first post on BP. Looking forward to learning so much more from you all as a complete newbie to RE investing. @Brad Hammond - thank you, I will double check with my loan officer to see if this could be a potential issue. @John Warren - thank you, this is great to know. I would like to hold onto the equity to reinvest in the near future. @Paul De Luca - very interesting info, thank you for sharing! I'm going to dig into this. @Matthew Olszak - I'm going to reach out to you to ask you some questions about this if that's ok. Also just interested in your property services business. @John Clark - There will be only 2 co-owners in this hypothetical LLC. The main motive for the LLC was the 20% taxable income reduction. @George Skidis - thank you for the advice, very thoughtful and helpful.

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How many people are going to be involved in the LLC? If it is just you, then it may not be worth it. Why? Because you personally can always be sued for your own acts and omissions. The fact that YOU did or did not do something "in the name of" an entity that YOU own and control does not protect you. I'm not talking about piercing the corporate veil. It is a question of the law holding persons responsible for their own acts and omissions.

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I read about this in a blog article recently: https://www.biggerpockets.com/...Bonus Tip — How To Cheaply Transfer Property To an LLC"...you can easily avoid triggering a due on sale clause by using a land trust instead of a direct transfer. Just follow these three steps: Purchase the real estate in your own name.Transfer the title to a land trust.Incorporate the land trust into your LLC structure. While the process is relatively straightforward, a real estate lawyer with experience creating land trusts can ensure that everything goes smoothly. Whether you are selling an LLC or transferring personal property to it, make sure you have the professional assistance you need to do it right."Has anyone here done this before?

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@Nigam Shah this is a conversation that has been raging since I started investing six years ago. A few issues that have come up recently in my world is that several of my clients went to refinance and had to transfer the property out of the LLC into their personal name. This happens more often that you would think if you are an RE investor as you want to grab any equity you build to reinvest. I recently listed and sold a property for a client who had to transfer a property out of an LLC to refinance, then they put it back in the LLC, and then put it in their personal name for the 1031 exchange... what a headache! I feel like most people should take a hard look at their business and decide if they really need asset protection. Keep in mind that an LLC doesn't actually provide protection... all it does is segregate your risk to just this one property. You could still lose the property in an hypothetical law suite, etc.

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Worst case scenario is it would trigger the due on sale clause so you would need to pay off the mortgage in 30 days. Best case, they won't care. There is a minimal cost to set up and file taxes under an LLC as well.

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I am not an attorney and do not play one on television.1. Check with your lender BEFORE transferring title of non owner occupied real estate to a Corporation, LLC or Land Trust. Non owner occupied loans are not protected by the Garn St Germain Act as it refers to estate planning purposes. You need the lenders permission to make the move. Some banks will, some banks won't.2. In my opinion the business entity such as an LLC or corporation should own nothing. It deals with the public and can lose everything it owns with a roll of the courtroom dice. Land Trusts are a great tool for anonymity. The land trust can rent the property to your business entity and grant it the right to sublet.3. Selling real estate owned by a corporation can create a tax increase hazard. With the goals of the current administration in mind the Corporate Tax will be going up. Depending on jurisdiction It can also make it harder to sell the property.4. An individual who owns property can represent themselves in court. Any entity must be represented by an attorney. Some judges even want land trusts represented by an attorney.Always consult an attorney when considering a change like this.

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Feel free to reach out via DM, email, or phone anytime. I'll send you the contact info of the attorney (who is also a cpa) my high net-worth clients introduced me to who explained to me about using an llc as a beneficiary to a land trust.