If you own rental properties in your own name and want to transfer them into an LLC, it can seem like a daunting process. However, ownership has important legal implications, so what are your options for doing so? That’s our first question for this Q&A Monday!
On this episode of Investing in Real Estate, I’m answering three listener questions. Topics include putting rental properties into an LLC, converting your primary residence into an investment, and calculating returns on performing assets. Tune in to hear more!
On this episode you’ll learn:
- What your options are for transferring bank-owned mortgages into an LLC.
- How to decide if you should turn your primary residence into a rental property.
- What you should look for in terms of ROI.
What Your Options Are for Transferring Bank-Owned Mortgages Into an LLC
For liability reasons, it’s best if you own your rental properties in a legal entity such as an LLC. Options for transferring your rental properties include: setting up a living trust and notifying your bank to assign your mortgages to the trust, asking your accounting firm to designate the debt to an LLC, and setting up a land trust. We suggest speaking to your accountant for specific, tailored advice, but also consider checking out The Loopholes of Real Estate by Garrett Sutton.
How to Decide If You Should Turn Your Primary Residence Into a Rental Property
If you’re moving out of your primary residence and trying to decide if you should sell or rent, there’s only one thing to do: run the numbers! The math doesn’t lie; if you can’t make a return as a rental, sell the property and buy something that will perform better. Right now is a favorable time to sell a house, so don’t feel guilty about selling a home that you love. Let it go, and buy something that can put cash in your pocket.
What You Should Look for in Terms of ROI
When you’re evaluating returns on an investment, there are two things to consider. First, consider what you’re receiving on any existing assets. Whether it’s a savings account or a 401k, you’re probably not making a very high return. Next, decide what you are personally comfortable with. Some investors are happy with anything above inflation, while others want to outperform the stock market. At our company, our lowest rates are around 8-10%. This is a personal choice, but I would not buy anything with an ROI under 6%.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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