I ran my scenario by a real estate attorney and they agreed, so I want to clarify that I am not looking for free legal advice. I just wanted to share this and I am very interested to hear if anyone has a different opinion or something to add. I am not advocating for this and would actually prefer not to be correct, since I have very low interest rates and no plans to pay off the properties.

All three of my properties are solely owned by myself and have conventional mortgages under my name. Due to the low interest rates of the past 10 years, they were home-run deals. With today's interest rates on commercial loans where I could put the deed in an LLC, the do not pencil as even short term rentals. My real estate attorney agreed that because the loans are in my name, there is no point in doing a quit claim deed to an LLC. The veil could easily be pierced because the loans are in my name. I am also the sole owner, so a single-entity LLC is even weaker protection.

My attorney did say that once the conventional loans are paid off, then they could be put into single entity LLCs by quit claiming the deed and have a strong foundation of protection, as long as all LLC rules were followed. I also asked about starting LLCs in states like Nevada and Wyoming, with strong LLC and single entity LLC protections. The attorney said unless the properties are in that state (mine are not), many judges would look at that as an obvious ploy to seek better protections and may still pierce the veil. They advised that it would be better to be honest and get an LLC in the state where the property is or in your state of primary residence.

The following threads were also really useful to me, but didn't exactly adress this issue. I know a lot of small-time investors are thinking about LLCs. If the loan is not in the LLCs name, it sounds like the LLC protections would be pierced, even if every other requirement was perfectly met. Curious if anyone has something to add or disagrees. I don't want to be right on this, so I'm only sharing what my attorney said.

Here are links to threads that discuss this:

https://www.biggerpockets.com/forums/52/topics/111054-am-i-protected-by-an-llc-if-the-mortgage-is-in-my-personal-name

https://www.biggerpockets.com/forums/95/topics/834545-quitclaim-to-llc-due-on-sale-clause-triggered

https://www.biggerpockets.com/forums/12/topics/128560-llc-vs-personal-name

https://www.biggerpockets.com/forums/52/topics/111054-am-i-protected-by-an-llc-if-the-mortgage-is-in-my-personal-name

Asheville, North Carolina

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