Real Estate - LLC for Rental Property?
My husband and I are considering purchasing as an investment a duplex/two family rental property. We would like to protect our personal assets, but are not quite sure the best way to do so.
A) Create a LLC, purchase the property with cash and place the title in the name of the LLC?
B) Create a LLC, try to get a loan for the LLC to purchase the property, and title the property to the LLC
C) Purchase the property privately, then create a LLC, and transfer the title into the LLC’s name
D) Purchase the property privately, NOT form a LLC, and get really good landlord insurance and landlord liability insurance / comprehensive umbrella policy, which covers not just physical injury but also libel, slander, discrimination, unlawful eviction and invasion of privacy suffered by tenants.
E) Purchase the property privately, and get really good landlord insurance and landlord liability insurance / comprehensive umbrella policy, which covers not just physical injury but also libel, slander, discrimination, unlawful eviction and invasion of privacy suffered by tenants. THEN “lease” the property to a LLC that we form to manage it, and the LLC in turn leases the rental units to the tenants. Then the question would be who would the Landlord
Additional information that may be of help.
• The property we are taking into consideration is across the street from our home
• Only one of the two units is occupied, and we like, know and trust that tenant enough that we would want to keep them. This is an exception for me, as I firmly believe in thoroughly screening perspective tenants - and I don't want to inherit someone else's poor decisions which could cost me in the long run.
• We are also interested in the future in purchasing two additional properties both within a 1/2 mile from our primary residence, one building is vacant, the other has current occupants. We would not pursue the other buildings until after 6-12 months after acquiring the first property (the one across the street from our primary residence)
• All buildings that we are taking into consideration are 100 yrs old.
• Although we could easily purchase the property with cash, we are considering taking out a loan so that we have a considerable cash reserve and flexibility for future investments.
• Our biggest concern in doing purchasing the property in our name and then transferring the title into an LLC is that it may trigger a due on sale clause on the mortgage.
Thoughts, advice or suggestions are sincerely appreciated.
- LandlordLv 79 years agoFavorite Answer
I do B.
You want the loan, so you have the tax write off.
- ?Lv 44 years ago
The condo residences have nothing to do together with her job at the RE firm. She can not use these hours to qualify as a real property respectable. The condominium residences won't qualify as SE earnings, so no SE taxes are owed if there's a obtain. If there may be a loss, it follows normal passive loss principles. You might be conscious that the LLC have to file a 1065 return, yes?