Moving property to LLC

General Real Estate Investing
1

I recently set up an LLC to hold investment properties. I use a buy and hold strategy, no flips right now. When I purchased a 4 plex, the lendor would not let me use the LLC. I had to put the property under my name. I’m told by the title company that they can deed the property to the LLC for less than $200 but that we’ll lose the title policy coverage.

2 issuses.

  1. I don’t really want to lose the title policy.
  2. I’ve not even made my first payment yet so it may be more likely that the note would be called based on the DOSC.

Would it be easier to move the property into a trust first? Would I avoid this mess? What would be a rough cost to do this?

Any help would be appreciated.
Greg

2

Greg,

        From what I understand (and trust me i'm NO expert) a trust will not violate the DOSC. As far as the cost to do so, I'm not sure but DA WIZ can probably give you a better idea being that he tends to specialize in trusts.

I do have a couple questions of my own though, were you given a hard time by previous lenders to purchase your properties under the LLC? I will be obtaining a property for free (family transaction) but would like to refinance under an LLC and a trust to eliminate the loan showing on my personal credit. What sort of restrictions did your lenders have or requirements?

3

Greg,

was there some issue with the title that’s causing you to want to keep the policy?

4

Hey Mark,

They didn’t find anything at title search but thats why they issue a title policy, just in case something comes up that they missed. Would I be better off putting the property into a trust first or just deeding it to the LLC? Can I take care of deeding it to the LLC myself or do I need to pay a lawyer $200 to do it for me.

I’m just not sure of the best way to handle it.

Thanks,
Greg

5

Greg,

I place my properties into the trust first, then assign title (all or an interest) to my LLC. The cost for a personal residence is $324, plus $12 per mo. trustee fee.

For my investment properties, the cost varies depending upon property value, but is always recouped from my tenant’s initial contribution to the trust – so it’s a net freebie.

Da Wiz

6

well, direct to LLC would break the title policy.

to trust with LLC-as-beneficiary would not.

neither would have a different impact on bookkeeping or taxes.

I’ve always been a fan of letting the bloodsuckers…er…um…atty do the first one. after that you have the form and it’s “fill in the blank”. But a trust isn’t complicated. I think I have a form laying around here somewhere…

7

I wanted to do the same thing, however moving it to an s-corp. I was told I could not, because of loan and company is not over 2 years old. However, my thoughts are that is what the s-corp was designed for (Protection).

I do not know what to do. Any advice?

8

bettysue, land trust.