I’m Joe Gerrity, local businessman, investor and Real Estate Broker. For my monthly “Yo Joe!” column, I’ll be answering your real estate questions as well as providing market information and housing statistics.
I believe the main responsibilities of a Realtor are to add value and facilitate mutually beneficial transactions, and through this column I hope to help the New Orleans community make more informed decisions about their housing future.
Yo Joe! I want to transfer my investment property out of my name and into an LLC. What’s the process like?
Well, let me start off by saying that the following is my opinion based on experience. I am not an attorney, a mortgage broker or a tax attorney. I do, however, work with many investors and personally own my investment properties in separate LLC’s.
It’s pretty simple and straightforward so long as you don’t have a mortgage, but even if you do, it’s hardly a complicated process. Head to your friendly neighborhood title company and request that they draw up paperwork for the transfer. If you own it outright and already have an LLC set up, you’re looking at right around $700 or $800 depending on where you go. If they need to set up the LLC, it will be a few hundred dollars more.
If you have a mortgage in your name, the process is exactly the same with one caveat: you’ll likely need to break the terms of your mortgage. It’s pretty rare that a lender will technically allow you to transfer ownership of the property to a separate entity, even if you’re the sole owner of that entity. The reasoning is that you personally guaranteed that mortgage, and as such you’re more likely to pay it off. That’s partially why they wrote you the loan to begin with. Technically speaking, it may be a default of your loan with them to transfer ownership to your LLC.
That said, it’s extremely difficult to find examples of this actually occurring. In my experience, 99.9% of the time you just keep paying the mortgage and nothing happens. If they are even aware of it, it’s clearly something they don’t focus energy on rectifying.
Long story short—if you’re interested in transferring your investment property to an LLC, it’s easier (and cheaper) than you think, so long as you’re sometimes OK bending a rarely enforced rule.
Yo Joe! What are the pros and cons of allowing my tenants to have pets?
If you’re going to allow your tenants to have pets, there are a few positives. Generally, you can get a little bit more money, since pet-friendly housing is always in high demand. Your unit will likely be a bit more desirable as well, for the same reason. Almost every landlord who allows pets collects either a refundable pet deposit or an outright fee.
Check out the Homeowners Guide to Owning a Dog in New Orleans
On the downside, pets can cause a lot of damage to a property, in some cases far more than whatever pet deposit you may collect. Nearly every dog, with few exceptions, will cause at least some wear and tear to a property through simply walking, opening doors with paws, scratching to go outside, jumping up on the windows to see what’s happening outside, etc. That’s why I tell my clients to simply collect a fee instead of a deposit. Nobody wants to spend their time arguing about whether the scratches on the floor were normal wear and tear or the result of dog nails.
You’ll also need to ensure that your insurance covers pets, and specifically does not exclude the type of dog that your tenant has. You may find that a loud dog actually hurts your overall property value as your other tenants may be less likely to remain, or new tenants may be more skeptical to live there.
Yo Joe! Any advice for someone moving soon who doesn’t really know where they want to buy a house in New Orleans?
Yes! Rent in New Orleans first. Get a 3- or 6-month lease, and figure out what part of the city you like the best. Enjoy the great outdoors and spending your time picnicking? Audubon Park and City Park both have great neighborhoods around them. Want to be walking distance from bars and restaurants? The French Quarter, Warehouse District, Freret, Oak, Maple, and half of the rest of the city has you covered. Need a garage, a yard, and off-street parking? Check out Lakeview, Metairie, Gentilly or the Westbank. This city has something for everyone. If you have time to spare and don’t mind exploring, rent for a few months and make a determination based on your experiences.
Yo Joe! How can I learn more about New Orleans Real Esate?
Plenty of ways! Keep reading this column, check out my New Orleans Real Estate Blog, which has dozens of articles covering everything from how to get started, to investing strategies, to how to identify common wood destroying insects. There’s something for everyone, and it’s a great spot to begin your education.
Once you’ve got the basics covered, contact a New Orleans Realtor! At Korman Gerrity, we have experienced Realtors who are ready to help. We do our absolute best to ensure that you get the professional help you need to make a great decision about your future.
You Know Joe?
Joe Gerrity is the Broker and managing partner of Korman Gerrity Real Estate, a full service New Orleans real estate brokerage located at 4505 Magazine Street. He is also the managing partner of Big Easy Buyers, and a founding partner of both Crescent City Vape and Simply CBD.