I want to turn my house into a rental property. Currently, the mortgage is in my name, however, I want to put the property into the name of my LLC. My mortgage is with US bank and after calling their customer service, I was told that I cannot transfer my mortgage into the LLC unless I 1) refinance my mortgage, or 2) put my property into an irrevocable trust.
For those of you who have investment properties, does this sound right? Are there other ways to put my property into the LLC? Am I unable to change my mortgage to the name of my LLC? Do I need to seek out a real estate attorney to help me make the change?
Lots of bad info in here. I did this
exact same thing.
The bank is correct because with a new owner you'll need a new loan. Federal law doesn't allow them to just "switch" the owner of a property even if both entities are just you.
I have an LLC and essentially putting your house as a rental but keeping it in your personal name is probably fine. The LLC provides a layer of legal protection but if something happens they'll come after you anyway. By keeping it in your name you don't need to mess with anything at the bank. I've had three income properties and realized the banks don't care what you do so long as they get their monthly payment. Don't ask don't tell, basically.
If putting it in the name of the LLC is that important, why not just refinance? You'll be able to write off closing costs and whatever the increased mortgage interest is. Because an LLC's assets flow to you anyway you can still get those deductions if the property is in your name.
FYI - I too thought this was a great idea until the renters trashed the place, forced me to spend $15,000 repairing it, and then sold it for less than I could have gotten if I would have just sold the dang thing years ago. Income properties are the best thing ever when the tenant pays the rent. They drain the life out of you when they don't pay the rent.
EDIT - my insurance went down when I switched it to a rental policy.