Some friends and I are trying to start a business owning/operating short term rental property. We formed an LLC for tax and legal protection purposes. When we found our first property, I took out a conventional loan in my name, to get a better interest rate on a mortgage, assuming I could transfer ownership to the LLC with a quitclaim deed. As it turns out, there is a "due on sale" clause that says if the deed is transferred, the mortgage would need to be paid in full, which we can't afford.
Our solution, I think, might be for me to lease the property to the LLC with a triple net lease. Can anybody inform me on pros and cons of this strategy or if there is some other technique for this situation? Big picture - I'd like for all of the expenses: property taxes, capital improvements, services, and the mortgage to be paid for by the LLC, by way of the rental income. So far the property is projected to generate enough income for this to be a reality, but I'm not sure all of my ducks are in a row when it comes to protecting my other personal assets and being able to use tax write offs for capital improvements. Any advice would be greatly appreciated.
