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Rental Property LLCRental Property LLC: Do This Before You Buy
Thinking of buying a rental? Federal law protects nine kinds of transfers from a lender calling your loan, and your own LLC isn't on the list. Who should form the LLC first, who shouldn't, and the key Bizee screens, start to finish.
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Why an LLC for this business
The account
Courts look at whether you kept the money separate
The policy
It has to name the real owner. Airbnb's cover doesn't replace it
The deed
Cash or DSCR: buy in the LLC. FHA or conventional: usually your name
How to start it, in order
- Pick your model: long-term rental, Airbnb, or renting to host. It sets your loan, insurance and permits.
- Check the address: zoning, HOA or lease rules, and your city's short-term-rental permit. Many cities require one.
- Choose the loan. FHA and conventional loans usually stay in your own name. Cash and DSCR buyers can use an LLC.
- Buying with cash or DSCR, or renting to host? Form the LLC and get its EIN before you sign.
- Open an LLC bank account. Run rent and bills through it, and keep personal money out.
- At closing, have the deed, title policy and landlord insurance name the same owner.
- Own it with a mortgage? Ask your lender in writing, and an attorney, before moving it into an LLC (due-on-sale clause; the federal list covers homes under five units).
Every fact in this guide was checked against a primary source before the video was made.
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