Question about buying first rental property.

Asked by Conall, Philadelphia, PA Mon Mar 15, 2010

I've been told to buy it using an LLC, but I've also been told that banks don't give financing unless the property and loan is in my own name. Which is true? Are there tax benefits to owning the property in an LLC vs my own name?

Help the community by answering this question:

+ web reference
Web reference:


Don Tepper, Agent, Burke, VA
Mon Mar 15, 2010
I'm not an accountant, so what follows is not accounting advice. For that, you need an accountant. However . . .

The advice below is correct. Many lenders won't lend to an LLC under any circumstances. Those that will want the LLC to be well-established or else they're going to want you to personally guarantee it.

Rather than jumping through all those hoops, you may just want to buy it in your own name, then immediately transfer it into an LLC. The mortgage will be in your name (so your exposure would be the same as if you personally guaranteed it).

Check with an accountant but, no, there aren't tax benefits to owning it in an LLC versus your own name. The profits and/or losses in an LLC will flow through to your personal return in any case.

The advantage of having the property in an LLC is that it provides a measure of asset protection. Not perfect, but--if done properly--moderate. So if, let's say, you personally get sued for something, you may be able to protect your investment property. Check with an accountant or lawyer, but what you want is a multi-owner LLC, not a single owner LLC. Similarly, if a tenant trips and falls in the rental property, a properly constructed LLC may isolate the tenant's recourse to the LLC and not allow him/her to touch your other assets.

An LLC sometimes is also useful for transferring ownership. For example, there are times when you might want to transfer ownership by selling the LLC that owns the property, rather than actually selling the property. Some investors do that when buying foreclosures. They don't intend to hold them for long, but they'll buy them in the name of the LLC, then sell the LLC.

A land trust actually provides more protection than an LLC and accomplishes the same things. See

Again, check with a lawyer and accountant as appropriate.

Hope that helps.
1 vote
Kathleen She…, Agent, Philadelphia, PA
Mon Mar 15, 2010
You should get advice from your accountant and your real estate lawyer regarding whether buying in the name of an LLC is the best option for you. Then you need to locate the best local lenders for the properties that you intend to buy. As others have stated, some lenders will let you title the property in the name of the LLC. I sell residential and investor properties in the Northwest neighborhoods of Philadelphia, I would be happy to assist you in finding financing and properties in those areas: Mt Airy, Chestnut Hill, Manayunk, East Falls, Germantown, Oak Lane.
0 votes
Timothy Garr…, Agent, Philadelphia, PA
Mon Mar 15, 2010
Hi, Conall.

As stated already, buying in the name of an LLC can help from a legal perspective, but it is hard to find lenders who will do this. It can be done, but sometimes the loan guidelines are not ideal and it might not be allowed on all types of loans (Fixed, ARMs, etc.).

If you would like to speak to a reputable lender about LLC loans, please send me an email at and I'll help. I was in the mortgage business for over 7 years and recently got out to pursue a career in real estate. Lots of luck to you.

0 votes
Heather Peck, Home Owner, Las Vegas, NV
Mon Mar 15, 2010
Conall - Lenders will only loan to a long established LLC and the rates are seldom as favorable as to a regular buyer. However, it is a good idea to purchase the property, then transfer into a trust that is managed by an LLC. You need to consult a tax professional for tax advice, and a lawyer for legal advice, however, having the property in a trust managed by an LLC can protect you from litigation. And if you own more than one rental property, and there is an incident where a tenant or contractor could sue you, they can't go after your personal property. It is always better to control than own.

Again, get advice from legal and tax professionals.

Heather Peck
Rosen & Company West
0 votes
Patricia Ste…, Agent, Philadelphia, PA
Mon Mar 15, 2010
Banks finance in an LLC name, however you will have to personally guarantee the loan.
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more