- Hey, what's up guys.
In this video, we're gonna talk about some of the things
you need to do after you've set up
your real estate limited liability company.
Okay, let's get started.
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All right, so you've set up
a real estate limited liability company.
You've got this LLC set up.
Maybe you're following my formula
that I like to use where, here's the LLC here,
and it's owned down here by this Wyoming LLC
that you have here, for course,
anonymity and additional asset protection.
So that may be your structure right there.
And now you have your property sitting right over here
and you're here and you need to get this property
into this limited liability company.
So here's the first thing you have to do of course,
is that you have to deed the property.
Number one, deed it to the limited liability company.
And when you're deeding it into the LLC,
you're going to be transferring from your name to this LLC.
One of the things you should pay attention to
when deeding property to an LLC,
number one, use a warranty deed,
do not use a quick claim deed.
If you maybe a grant deed, if you live in California,
but you want to use a deed that you're transfer,
you're given a warranty when you're transferring
that property in.
And the reason why I suggest this is
for title insurance purposes.
When you transfer title into that LLC,
if something goes wrong in the future,
if say it was a title issue,
maybe there was an encumbrance on title
that was not picked up
when you bought the property.
If you want to bring a claim against your insurer,
if you've used a quick claim deed,
a lot of title insurers can step away from that and say,
well, when you transferred title,
you didn't warrant anything,
therefore there's nothing for us to cover.
So I suggest you always use a warranty deed.
And now a better thing to do after you make
this type of transfer is contact your title company
and let them know what your deed is
and see if there's a little ride
or something you can pick up
to put on there to get them to extend
the coverage just directly to the LLC itself.
And so that would provide you ample protection,
but you want to make sure you're using a warranty deed.
This is a common mistake that is made by investors.
They set up their structures
and then they never put the property in to the LLC.
I don't know if you've caught my video,
where I talk about an individual,
same scenario, didn't get the property transferred
into the limited liability company.
They had a tenant who was a drug dealer,
was making meth, passed out, no working smoke detectors,
of course, 'cause he's making meth
and he burns up and he dies.
Well, they sue and they sued
the owner of the property, of course,
and he said, no, no, it's in a limited liability company.
Well, it actually wasn't
because the deed had never transferred the property in.
So it's key that you do that.
Now, if you're going to deed the property in,
but you don't necessarily want anyone to know
that the property is held by an LLC,
remember when you deed property into anyone,
a limited liability company,
you need it to a land trust corporation, to a third party.
If you don't record it, then no one's going to know
that that property transfer has taken place.
And in some situations,
they use of what we call a pocket deed,
it's still a warranty deed, but you just don't record it,
which then we use the term pocket deed
'cause you keep it in your pocket.
May be something that's beneficial to you,
so for example, if you're in Pennsylvania
where they're going to tax this type of transfer,
once it's recorded,
you hold on to that warranty deed.
So you sign it, you do everything you're supposed to,
but you just don't record it.
The fact is you have to prepare the deed to get
that title transferred over to the LLC.
Now, once it's in that LLC,
what else do you need to do?
Well, I would say get a bank account set up, right?
You need to have a bank account
inside of that limited liability company.
And there's no particular order
so these next few that I'm going to be talking about,
but just something to keep in mind, set up a bank account.
So you can then collect funds from your tenants.
Now, depending on how many LLCs you have
and whether or not you have a management company,
maybe you're not going to be using the bank account
in this particular LLC,
because your structure is maybe
it's the properties are managed
by an out of state property manager,
and they're not going to cut multiple checks.
That's, we'll save that for a different video.
But suffice to say is that most instances
get a bank account set up for your LLC.
The next thing you're going to want to do
is get the insurance changed, all right?
You gotta make sure that you insure that property.
Get your LLC as the named insured under that policy.
Many times when you transfer real estate
into limited liability companies,
your typical insurer say Liberty Mutual
is not going to give you that policy any longer
because they just don't insure limited liability companies
that own real estate.
So you have to look to someone else
like Natural Real Estate Insurance Group or Chubb,
two of the main groups out there
that insure real estate investors.
And they'll walk you through,
is that a named insured,
additional insured, who all those parties are,
but you need to have that discussion
to make sure the property party is insured
once that property has been transferred in.
All right, now, if you have tenants in the property,
you need to notify tenants, okay?
So let's notify them,
notify tenants that there's a new property owner,
let them know, hey,
the LLC is now the property owner and going forward,
you need to make all your payments
to this limited liability company.
Which also should then tell you that
after your is set up and the properties held in the LLC,
new tenants that you bring into your property,
your rental agreements should be between the LLC and them.
Now this is generalized,
I mean your structure could be different depending
on how it's set up.
It's not a one-size-fits-all,
you've probably heard me say that many times, but you know,
notify existing tenants, new tenants,
they're going to possibly be renting from the LLC.
They're no longer from you as an individual
or they're working of course,
with the property manager that manages these properties
and then it's really not relevant.
The other thing you want to make sure you do
is change utility.
So any utilities that you're responsible for,
that are in your name associated with the property,
you want to get those transferred over
to the limited liability company.
So you contact those utility companies
and make sure those get changed over to the LLC.
Again, you want to get all this out of your name
because if a tenant were to vacate the premises
and they run up a huge utility bill,
you don't want to be the one listed on there
and be on the hook for that.
That's why we have the limited liability company.
Now, those are the things that you should be doing
after you set up this limited liability company
for your real estate.
The thing that you should not be doing
is calling up your mortgage company
if the property is in cupboard and saying,
hey, I just transferred my property
into a limited liability company,
my single family residence,
and I would like to change my mortgage.
All right, you want to open up a can of worms for yourself,
create a bunch of problems.
You've just done that with that phone call,
because as you should know by now,
the mortgage company that you currently have
is not gonna change your mortgage to an LLC.
They may be okay with you transferring it in,
but they're not going to transfer it over.
And if they're not okay with you transferring it in,
well, you just notify them
the fact that you made a transfer
and that's not going to be
in anyone's best interest to do that.
So those are the things that you should be conscious of,
make sure you're checking off
after you've set up
your real estate limited liability company,
and you're ready to put your property into it.
Check all the boxes, get out there and start making money.
All right guys, hope you enjoyed this video.
If you haven't done so already subscribe to the channel
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