Advice starting an LLC

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Im looking at forming an llc for rental property i have. I know i should have done this first but i obtained the units and tenants already in place.

Does anyone have experience with the online LLC companies? Can i just go that route? Do i need to hire a lawyer locally to start this? How do i transfer the property out of my name to the LLC?

So many questions.

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I've used a local attorney for our rental property units, so don't know about online.

We ran into an interesting problem though where we ended up not putting a property into the LLC.

We'd had a sweet low cost loan, something like 2.75% When we talked to the mortgage company broker we use, was told we'd have to refinance to something like 7%.

When you transfer a mortgaged property into an LLC, the main issue is the “due-on-sale” clause that most residential loans include. This clause allows the lender to demand full repayment if ownership changes, which is why lenders often say you’d need to refinance if you want the mortgage in the LLC’s name. Refinancing into an LLC usually means taking on a commercial loan, which comes with higher rates, shorter terms, and stricter underwriting, so you’d lose the benefit of a low 2.75% residential rate. Some landlords instead keep the mortgage in their personal name and transfer only the deed into the LLC, which technically could trigger the clause but is rarely enforced if payments stay current.

The bottom line is that refinancing is required if you want the loan itself under the LLC, but if your main goal is liability protection, many investors leave the mortgage as-is and use insurance plus LLC structuring around the deed.

Use a lawyer if you want to get an operating agreement but getting an LLC online can take 10 min. You will need register it with your state SOS and will need to file for an EIN with the IRS. can all be done online.

If you have a loan already, you're going to have to refinance to put under your LLC name. I think you will need to change your insurance as well to the LLC.

You need to consider this because if you have it in your personal name and something happens at your rental , lawyers and creditors can come after everything.

In Louisiana you can easily do it yourself on the Secretary of State’s website.
If you don’t want to do that, get a lawyer to do it.

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Advice starting an LLC

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First, make sure it's not out of gas...

You should visit with a cpa before anything.

I started an LLC about a month ago with GeauxBIZ. It was super easy. I'd been putting it off for a while and glad I finally did it. It was like $100 or so and after I submitted the application it took a few days to get approved. You can pay extra to expedite it. You'll need to get a federal EIN during the process which is also a breeze. It only took a few minutes and you get one immediately.

My advice would be don't overthink it and just start the process on GeauxBIZ.

If the property is in a different state than where you reside, do you form the LLC in the state where you reside or in the state where the property is located?

I did.. but you will need a designated location for your llc mail to be delivered.. in the state of the llc.. it also has to be a real address and not just a post office box… a place where someone actually checks the mail daily

Could be a good friend.. parents etc.. I use a company out of Lafayette that does this as a business.. they are probably just a location with a bunch of post office boxes… but it meets the requirements.

I have the llc in the state I have the rental..

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My advice would be don't overthink it and just start the process on GeauxBIZ.

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Sure It’s easy to get things approved online. Does that mean the liability protection will actually be effective in court? Maybe not.

Simply Having a seal from the Secretary of State and tax ID number doesn’t guarantee liability protection in court.

OP needs to follow best practices like keeping separate business records, not having the LLC be too thinly capitalized, etc

I have rental properties in a few different states and I never created a LLC for them. I do have a commercial property that is under a LLC but that is because it collects rent from a business I also that is under a different LLC.
Anyway, I don’t see the need for a LLC for residential real estate.