All Forum Posts by: Kate Jones

@Kate Jones First off, this is not a stupid question! You legally can move the title for the property into an LLC. That being said, the debt will stay in your name and therefore on your credit. You are also risking the due on sale clause being called if you transfer the title to an LLC. Freddie Mac loans allow this in specific situation where the due on sale clause will not be triggered.

https://guide.freddiemac.com/a...

That being said, I think you can still on transfer the title and not the mortgage. 

As I understand it, the only way to remove a spouse, co owner, old owner, yourself, etc. from a mortgage is to pay off the whole old mortgage with a new mortgage that is in the name of the entity you want to hold the debt(and has title). 

You are allowed to have multiple mortgages though, I have four and am about to have a fifth. Your DTI just needs to be able to support them. That being said, depending on the lender, about 75% of the rent from the properties can be given back to you to help your DTI.

You might be able to do a "subject to" loan take over from yourself to an LLC you own, but I bet this get's really messy really fast. If you google "due on sale clause" and "subject to mortgage takeover" it will help you get a better understanding of the subject.

One thing to also know is that while "due on sale clauses" do actually get exercised, it is relatively uncommon. Most things you will find on the internet will make them sound very scary, and if they get executed, and you do not have cash/ cannot refi, you could be foreclosed on, that being said, people need to determine what level of risk they are willing to accept. 

I hold properties bought as investment properties in LLCs, the biggest advantage for me was this allowed for the LLCs' to have the debt in their names instead of mine. 

I do hold properties that I bought as primary residences and converted to rentals in my personal name. I have yet to figure out a way to move them, as well as their debt, into an LLC without having to change the financing terms.

LLC creation in CO is pretty simple. I do have some of them registered to operating in Iowa, as that is where some of my long distance properties are. The "foreign entity" registration was a little weird but the most significant cost with it was having a local address for compliance, which I pay Harbor Compliance $99 a year for.

If you are not sure how to set up an LLC where you are investing, I would contact your State's Secretary of State office. In most states the Secretary of State handles business registrations and can help you out a lot! I have been shocked with how easy SOS offices tend to be to work with verses other government entities!

IMHO - If you have a choice, do not start your RE business in a state that is blue and so tenant friendly. It will cost you a lot of time and money over the course of your career.

You did not state this but it sounds like you are able to work remotely so are not tied to any one area.

You have to ask yourself what gives you the best quality of life, both short and long term.  Because it is cheaper, you will likely have more investment opportunities in OH or KY, but if you are traveling back to NY all the time for family events, that might not make sense.

You made a comment on taxes and later an LLC. The taxes for the properties will be based on where the property is located. For income tax purposes, you would be better moving to a low tax state. Also, I wouldn't be in a hurry to form an LLC. Get good insurance and be sure you know the downsides of putting a property into an LLC.

Hi Kate,

Regarding your question, as per the example of the following public listing below, it can be seen that you can make it work/profitable in a multifamily by just occupying separate units/apartments where each has its own kitchen area and appliances.

Does that correspond to the type of house hacking you wanted to consider?

Steve Olivier 

 I inspect 1-2 times a year. If the tenant demonstrates other bad behaviors, then I may trigger an additional inspection to check on things. One bad behavior can often indicate other things are going on.

Have you read any books on managing rentals? I notice you're asking a lot of questions. I often recommend you start by reading some books to get a firm foundation on what's involved with managing a rental. That will answer 80% of your questions, including things you've never thought of.