All Up In Yo’ Business: Putting Property in an LLC


Learn more about LLCs by viewing Avoiding the Risks of the Single Member LLC at http://youtu.be/N0HLOQEu17k

“Should I put my investment or rental property in an LLC?” I get asked this a lot. I mean, a lot. Putting an investment or rental property into a limited liability company (LLC) can be a fantastic way to protect your personal assets from any liabilities of the property(ies). If you are thinking about putting an investment or rental property into an LLC, or if you already have, there are a few things that you need to keep in mind.

Before I get into that, let’s recap what an LLC is and why it may be a good thing to have. An LLC is a legal business entity. If someone sues an LLC, in most cases, only the assets of the LLC will be subject to liability in that lawsuit. The personal assets of the business owner should be safe. So if you own an LLC and get sued, you can generally rest assured that your personal bank accounts, personal residence, and all your other personal assets will be protected. In terms of a rental or investment property, then, if you form an LLC and somebody gets injured on the property and wants to sue for damages, they would have to sue the owner of the property, which would be the LLC. And they would only be able to collect from the assets of the LLC (i.e. the property itself and any additional business assets such as bank accounts). So, the purpose of having an LLC for your investment or rental property is to insulate your personal assets from the liabilities of the property.

The second question that generally gets asked is “I have more than one rental property; do I need to have an LLC for each one?” The answer to this is: it depends. Depends primarily on your tolerance for risk and how much additional administrative crap work you want to deal with. If you have one LLC that holds multiple properties, you should still be protected personally from liabilities of any of those properties. However, as I mentioned above, any assets of an LLC can be subject to liability. So if there is a lawsuit regarding one property in the LLC, all of the other properties in the LLC will be at risk as well. If you have a separate LLC for each property, then each one will be insulated from the liabilities of the others. That’s a good thing and, ideally, the best way to do it. However…lets say you have two, three, four, five different properties and want to put them each into their own LLC. That’s two, three, four, five different LLCs that you now have to run. That means different bank accounts, books, Operating Agreements, annual filings, tax returns, etc., that you have to take care of. That can obviously become pretty time consuming and expensive. So there really is no real answer to that question. If you want to put the time and money into each LLC in order to have full limited liability, then that is fantastic. But in some cases it may be overkill and just not worth the hassle.


The last thing that comes up a lot with LLCs for rental or investment properties is the fact that the LLC has to actually own the property. That means the LLC must hold title to the property. This can be accomplished by deeding the property to the LLC. (People like to do this on their own a lot. There can be big, bad results from using the wrong type of deed or filling it out incorrectly or incompletely. I strongly recommend you seek help from an attorney with this.) The other consideration with doing this is, if you have a mortgage on the property, and the mortgage is between you personally rather than the LLC, your lender may not like you transferring ownership of the property to the LLC. Most mortgages have a “Due On Sale” or similar clause that allows the lender to call the entire mortgage upon transfer of the property. So if the lender finds out you transferred the property, they may try to get you to pay the entire remaining balance of the mortgage.

Putting investment or rental property in an LLC can be a great way to insulate yourself personally from the liabilities of the rental property. It’s just important to remember that the LLC is a business and needs to be run like a business. And if you have multiple LLCs for multiple investment or rental properties, each LLC is its own separate business entity and needs to be treated as such.

The Law Office of Aiden H. Kramer, LLC
(720) 722-0639
http://aidenkramerlaw.com
aidenkramerlaw@gmail.com

Sad solo dance party music by:
Stryv – Surge (Original Mix) by Stryv is licensed under a Creative Commons Licence.
https://soundcloud.com/stryvmusic/str…

STRYV Social Networks:
http://facebook.com/stryvofficial
http://twitter.com/stryvmusic
http://youtube.com/stryvmusic
http://soundcloud.com/stryvmusic

More info about the license:
http://creativecommons.org/licenses/b…

20 Responses to All Up In Yo’ Business: Putting Property in an LLC

  1. JSD NTPZ

    Wouldn't that be costly? If you have multiple properties, one will have to register each llc with state? Annual taxes will be overwhelming!??

  2. Brittany Fife

    What about if you own the property personally and lease the building to the LLC?

  3. Edgar Arenas

    Seriously great points. I’m going to call my attorney and put my income property in an LLC ASAP, if I lived in Colorado, I’d call you. A subject that you might want to cover that is becoming hot is Uber/ride share car purchases. The advantages of forming and LLC for a business vehicle.

  4. Edgar Arenas

    If you had a disco light go off at 0:18, it would be so hilarious.

  5. Anatalie Dee

    Great video. Appreciate the information. God Bless.

  6. Don Bowins

    Need you here in Tennessee.

  7. Nathan Cunningham

    One does not just simply put the property inthe LLC do they, Isn't it a little more involved than that? Do you have a video covering the ins and outs of that process? Thanks, great info btw!

  8. Savages

    So informative.. So Cute!

  9. Nicki Minaj

    😂😋😘from Detroit.ill be calling

  10. TheBlackRoc

    I love the high tech graphics.

  11. Donald Grazette

    You are hilarious and smart….lmao…I love it.Now if you're incorporated its more difficult for a person to sue or have access to the property right?

  12. Mill Coop

    I love youuuuuuuu!!! Your advice is great!!

  13. Yak Motley

    Great video! Love the graphics!

  14. code3design

    Transferring a deed from a person to an LLC with a quitclaim nullifies the title insurance. However, if you transfer from a person to an LLC using a warranty deed, is the title insurance still intact?

  15. David Spedden

    Thank you very much for some actual good information. It's been difficult to get good answers from so many other sources.

  16. Salvador Kalil

    As you set up a checking business account under te name of your LLC how much money should you keeping in it ? I imagine enough to cover monthly operating expense s, etc. Also what happens when you take money out from that account for yourself

  17. Laura Avila

    Gotta love those good quality high tech graphics 😉

  18. IHeartKids Childcare

    What are the cons?

  19. Break Down From Maximum Height

    You are very helpful with great info………. and attractive. 🙂

  20. ABEL DIAZ ZAMORA

    I love uuuu………thank you..   love the graphics you might wanna cut down expenses on those.. play it safe..