Howdy. I have a real estate scenario for the gurus on this board. Very recently an attractive job opportunity has arisen in another state that would require us to move in the next couple months. However, based on some preliminary estimates that our real estate agent gave us for our current home it looks like it won't make sense to sell (at least through an agent). Since we will likely rent in the next city for a year or two anyway to get our bearings, we are considering renting out our current home in Houston during this time through a good property management company while we are out of state. Further, I think our neighborhood will see decent price appreciation over the next two years that we would like to participate in. My question is, how do folks typically do this given the myriad considerations? It seems to me that I should (1) form a Texas LLC, (2) refinance our mortgage to allow for the residence to be non-owner occupied and to permit us to sell the home to the LLC, (3) sell the home to the LLC (note, any benefit to getting a new appraisal at this point?), (4) obtain landlord insurance on the home, and (5) lease it out through a good property management company. Does anyone have any experience on this type of thing? Am I over or under thinking any aspect of this (besides the fact that some kid may burn my place down)? Note, as implied by my handle I am an attorney, but this is not really my area. TIA

No LLC with a traditional mortgage. You could refi with local bank but still need to personally quarantee the note. You put the existing or new loan in one and you are subject to the risk of the lender can call the note.

Your mortgage has nothing to do or oppose renting the home. That's HOA area.

Over insure your liability to cover your LLC or lack of.

Yes on property management. Being out of state really increases your loss risk if doing it yourself

Jj always succinctly gets to the point

Thanks for the help! My rate is great, but I was under the impression that residential mortgages that were written as owner-occupied did not allow you to then rent out the property. I need to look more closely at the paperwork but if you are right that will save us some cash and trouble.

Nothing in your mortgage docs prevents you from converting a primary residence to a rental assuming you signed said docs as truthful.

I'm not a lawyer and do not represent you and in mortgage which I could be a professional witness.

Maybe you should consult an attorney.

Hi Law Ag,

I just joined a new property management company in Houston as the Property Manager. The owner has moved from DC to open up a new office here. We have been in business since 2012 in the D.C. Metro area and manage 250 properties up there.

Most of our owners are in your exact situation, where they had to relocate but don't want to or can't sell their home so they choose to rent it out instead. We only have a handfull of owners with more than one property.

We are begining to grow our portfolio in Texas and if you are interested in hearing more about how we do things feel free to shoot me an email:

Aschaefer@FlatFeeLandlord.com

What's the point of the LLC?

Or are you just flexing your law degree?

I had the same type of scenario. Bought a home before I got married. Moved to wife's home and rented my house out. Formed an LLC to property manage the rental to cut down on taxes