Most real estate investors start by buying properties in their personal name. Many smart investors eventually end up establishing an LLC structure for their properties. Once an LLC structure is set up, then you have to get the properties out of your personal name, and into the LLCs.
Colin Ley is an asset protection attorney and the creator of the PREP Trust® and Better LLC™. He is also the co-founder of LayRoots (along with with partner in life & business – Shreya Ley)
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- Hey friends, we had a question recently pop up. How do you get your existing properties into the LLC structure? Great question, Shreya.
- It is a great question.
- You know, a lot of people don’t start out with an LLC when they have properties.
- No, they usually start out with them in their own name.
- Right, ’cause a lot of times if you’re doing some financing to buy these homes, that has to be done in your personal name.
- It does and sometimes people also don’t know.
- Exactly, you don’t know what you don’t know.
- You don’t know what you don’t know.
- Unknown unknowns? Or known unknowns?
- It’s probably an unknown unknown.
- Well, either way, at some point, a lot of people worried about the risks associated with real estate investment, worried about lawsuits, they setup some sort of asset protection structure, which may have an asset protection trust. Or an LLC.
- Whatever it is, you end up creating one of these entities and then you have to get those real estate properties.
- Into the entity.
- Right, because otherwise the entity is just empty and there’s no bubble of protection around the property.
- Yeah, I think people get really confused, well, first of all, I wanna say people are out there, they find this investment property, they’re like, this is the investment property for me. And they’re so excited and they don’t wanna wait and like talk to an attorney, and get a structure set up. So, I feel like this is a lot times what happens and then they’re like, I’m just gonna put it in my own name and then deal with all of that stuff. And then they never deal with that stuff. And then before you know it, they have have five properties, and then they come to us.
- And so, let’s get to some answers here Shreya.
- Feel like we’re just rambling around.
- All right.
- So basically, to get a property into an LLC or a trust, you have to create a deed that transfers title from you, the personal owner, into the LLC or the trust. So, it’s kind of like when you bought the property. One of those deeds was signed. The seller signed it, you, the buyer, signed it as well. And that’s what transferred ownership into your personal name, so now you have to do that again. You have to create that legal document, you have to create a new deed that is going to transfer the ownership from your personal name, into ownership, into the LLC or the trust.
- And you gotta file that, you gotta file it with your county.
- Yeah, and so there’s–
- Make it official.
- There’s people out there who just do these types of things, someone like U.S. Deeds. Think they do attorney drafted deeds in all 50 states. It can be pretty straight forward. There can be some complications, if you do have financing or mortgage on a property. There might be certain restrictions on whether you can transfer the property into an LLC or not. Thanks, that’s it. Thanks Shreya.
- Thanks Colin.
- All right.