It’s amazing how many tools there are at our disposal when it comes to real estate investing. I’d like to talk about one that can come in handy when dealing with the issue of getting loans, but wanting to have your property in an LLC.
Note: this is not legal advice, please check with your attorney when making any such transactions.
Get the Loan – Then transfer into LLC by way of Land Trust
Using a land trust is always a good idea, regardless. It provides anonymity for the owner which protects you because you can’t get sued if it cannot be proven you own the property.
Additionally, when a title is transferred to a land trust it doesn’t trigger the due on sale clause that is part of a traditional mortgage.
Generally when title changes hands it triggers the loan to be paid in full.
Now push it to the LLC
Once the property is in your land trust you can then transfer the title to your LLC. Then make sure your LLC has an operating agreement in place to manage that property within the trust.
Basically this gives us a way to take a property that we buy in our own names, usually in order to qualify for a traditional mortgage, and move it into our LLC.
Remember – owning investment properties in your own name is a liability risk. Yes, insurance is great but only goes so far. Having properties in entities like land trusts and LLCs provides protection for you and the assets you’ve worked so hard to accumulate.
If you are just getting started in real estate investing then check out the ScaredyCatGuide to Investing in Rental Properties Video Tutorial