Welcome to passive real estate investing, the show where busy people like you learn how to build substantial passive income while creating wealth for the long term.

And now, here's your host, Marco Santorelli.

Do you really need an LLC before buying your first rental property?

This is one of the most common questions that I get. And today I'm

breaking down the pros and cons when you actually need one and how to set it up the smart and affordable

way. The truth is, sometimes you do, sometimes you don't. And getting it wrong can cost you time, money, and stress. So let's

clear it up. I'm Melissa Nash and I have built a seven-figure rental portfolio from my couch. And today I'm

walking through one of the biggest investor questions I get LLC or no LLC. Okay, here's the deal. I am just going to shoot it to you

straight. I think LLCs are a good idea. They help provide protection and help run your investment

like a business. But do you need one before you buy your first property?

Well, it depends on the type of loan you're using.

So with conventional loans, so think of standard Freddie Fannie loans, you cannot close directly in an LLC.

The property must be titled to your personal name. Lenders will run your credit and qualify you personally.

Now after closing, you can do a quit claim deed to transfer the property to an LLC.

So you can do this any time after closing, whether it's a day or two years or three years or four

years. And there's different reasons why you may or may not want to move that property into an LLC.

But for the most part, LLCs are for asset protection. So the second type of loan that you might

be looking at getting for a single-family investment

rental property would be what's called a DSCR loan.

And this stands for debt service coverage ratio.

So there are some different rules here.

You are actually required to close in an LLC. That means that you need to

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