All Forum Posts by: Daniel Chen

Okay thanks, these are some very useful information. 

I will again make sure my lender send me that confirmation in writing. BTW this is what they sent me when I initially reached out:

The due-on-sale clause will not be invoked at the time of transfer to your LLC, if you wish to go that route. The terms of your mortgage and interest rate will remain the same and no refinancing would be required. If you wish to proceed with this, please advise and an electronic packet will be sent your way.

I've already spoke with them, they won't call the mortgage. But I still own the mortgage, so doesn't that mean I am to pay it in whatever form I can? Which is the core of my question in the start, does it matter for the lender if I pay directly using the LLC's bank account that collects the rent or I take that money out from the LLC to my own they pay as I do now. I think I understand it from the legal protection point of view to not draw money from the LLC account to my personal and then pay as it creates legal liability when I mingle the two.

It brings up another question then... lets say I only break even on mortgage vs rent, if I am in between tenants for a month or more, which means my operating income isn't enough to cover the mortgage, at this point if I choose to deposit my personal money to the LLC bank account to cover the mortgage for those months, does that create a potential legal issue down the line if I do get sued?

From what I can tell from my talk with my lender, the mortgage is still with me personally, I am not sure if this means what I think it means though. I do get the rent in checks and transfers currently to my personal bank. Once I do the deed transfer the payment will be made to the LLC bank, but I am unsure if the mortgage will be owned by the LLC as well per my lender as they stated very clear that I still own the mortgage and any refinance etc require the transfer back of the deed first. Also this brings out my question regarding the taxes but that can be asked another day.

After the transfer happens. How does paying mortgage on the property work? Do I as a owner of the LLC take money out of the business on a monthly basis from the rent these properties make and pay the mortgage as before? Or does the business account need to be where the money is coming out of?

Thanks for the answer.

Hello everyone,

I already setup a new LLC for several properties that was rented as our family investment property. I have not yet done with filing the quit claim deed but I talked to my lender and they are okay with it.

As I am doing this, can I start to ask my existing tenants to sign new leases with the LLC and make payments to the said LLC or do I need to wait till everything is done.

Thank you

Wow thanks for this awesome response. 

I will be able to log the 50% time of business use. But I think the your point on this causing a business loss is what's going to be my biggest huddle. Because like you said, my rentals are very close to a net loss on a yearly basis. I think maybe the regular standard mileage deduction might be my route then. I've searched around and think I do understand how it works, but do you know any good resource that I can get more if not at least the accurate information on it?

I am managing 4 rental properties that me and wife owns. All of them are LTR, I do have a full time job so this is something I do outside of that.

Regular activities include yard work, small repair & maintenances, activities relating to a tenant turnover. I currently use the two family cars we have to conduct these activities, and I am looking to buy a new vehicle that is more suitable (a truck) for the tasks that I have been doing. 

I do want to take advantage of the section 179 deductions if its possible. I do not have a LLC and I have been reporting my rental income and the expenses associated with it in Schedule E. I am wondering if it's as simple as just purchasing the car under my own name like a regular car and next year just add that car to a schedule C while I keep everything else still in Schedule E.

Thanks in advance.