All Forum Posts by: Eli Jerman

Thank you for the help! Ill reach out to them.

So I have a slightly unique situation (At least I think it is) but I recently assumed an FHA mortgage. The mortgage started 2 years ago before I assumed it and obviously the seller met the owner-occupied requirement by living in it for a year. So, my question is that because I am not starting a new FHA, and continuing the one started 2 years ago, do I have to now live in it for a year as well? Or has that requirement already been met? I do plan on living in it for a year at least but I want to redo a large amount of the interior so it would be much easier if I did not actually have to be living in it yet. Thank you for any advice.

Quote from @Stuart Udis:

@Matthew Crivelli I disagree. The benefit of FHA financing is the leverage. If FHA buyers make good purchases those transactions can be a great launching pad. I could understand refinancing if there is equity that can be tapped into but I wouldn't refinance in order to transfer the property to an LLC. I personally believe the positives of FHA financing far outweigh the perceived liability exposure many caution of and its one of the few circumstances where I wholeheartedly believe investors should prioritize FHA financing over purchasing properties in an LLC.

In fact, even if the property were to appreciate to the point where a favorable refinance event existed for @Eli Jerman I would most likely still advise against re-titling the property in an LLC. If Eli operates his business correctly he will personally be fine and given the collateral is an FHA property the transactional costs simply don't justify the added transactional expenses if a risk analysis were run. Again circling back to my previous post, proactive asset protection relates to the way you operate your business on a daily basis. That is how you protect yourself from liability exposure, not by forming an LLC.

I also assumed this loan from 2 years ago and have it at 3.5% so I don’t think refinancing will be in my future anytime soon. I looked through some of your other stuff Stuart. So for when I write a new lease, does it make sense to have an LLC just to collect the rent and write the lease in the LLC name? Idk if that’s even possible. 

Thank you for the response. She is still on a month to month lease. That is in place and its solid. I want to move her to a yearly or bi-yearly lease so that is what I meant by saying I am waiting to get a lease setup. Sorry for the confusion on that. 

Sounds good about the umbrella policy. My real estate agent mentioned that might be a possibility and she has one setup for her rentals. I will speak with my home insurance about that. 

Thank you again.

I just purchased my first investment duplex at the beginning of this month. I know I want to buy more properties in the next couple years but for my first one, how can I setup an LLC for the best asset protection? When I was going through the mortgage property the loan processor (didn't really seem like he knew what he was talking about fully) mentioned I can't put the house in an LLC because its an FHA and it might make the loan Due on Sale? He said it can be in a trust but not an LLC. Can I still make an LLC and just collect the rent and put the maintenance and mortgage payments through that LLC? Can I put the house in a trust and then put the trust into an LLC? Then the lender wouldn't know? I am not sure. I have not had the tenant sign a new lease yet because I want to see if I should write it in the LLCs name or mine. She is on month to month right now. Do I speak with a real estate attorney or an real estate accountant?

Thank you for any help.