Starting An LLC
I have 4 properties in my name. If I were to chose to start an LLC and put the properties in the LLC, would my mortgage company be able to accelerate the mortgage? My interest rates are 5.5 - 6.0 % for 30 year fixed, so I do not want to take a risk.
Other forum participants may have their own experiences to share; however, I can share that most, if not all, mortgages have the due on sale clause. People transfer their properties to LLCs all the time without any problems. Why? ... because as long as the mortgage company is getting its monthly payment, they're not going to give you any problems. They want your money and don't care much whether the title went to a LLC. You probably personally signed on the mortgage anyway. Of course you can contact the mortgage company and get written permission to make the transfer, but it may be more trouble than its worth. My suggestion is to make the transfer and not worry about the due on sale clause.
By the way, you may want to consider having a separate LLC for each property in order to isolate risk. For example, you could put a property with a swimming pool into one LLC and the other 3 without pools into a second LLC.
The mortgage company doesn't have a direct line to the courthouse to monitor any recorded changes in property ownership, so they're unlikely to find out. Some banks, however, order records of tax delinquent properties--I know because I buy those same lists from auditors to look for distressed properties--so as long as your payments are current and you keep the taxes paid you'll probably slip under the radar. MIght attract attention though if, for example, your insurance company and mortgage holder compared notes for some reason (like payment on a claim to the additional insured, your mortgage holder).
I saw that last situation once. Although the mortgage company was just curious, and probably wouldn't have done anything, the homeowner decided to transfer the property back to his own name and avoid further trouble.
The reason I ask this question is because I plan on owning these properties long term. This is why I got the 30 year fixed. If the rates go up high enough, I am worried that the mortgage companies might start looking around for excuses to accelerate the mortgages. Does this seem like a possibility?
It is ALWAYS a possibility if they have that option. You can speculate all you want, you won't know until they do it.
You can always have the LLC sell it back to you when they call the loan to try to head off the loan being called.
You can pretty much be assured though that if rates went through the roof and the loan is paid down enough that they aren't making a ton of money on the interest that banks will come up with creative ways to move these low interest rate loans off the books.
A separate LLC for each type of property? I have not thought about that.
Do you need an attorney for LLC or can you do it yourself?
Most participants on this site would agree that you can set up LLCs without an attorney; however, it wouldn't hurt to involve an attorney knowledgeable in estate/tax/asset protection planning to at least help with the big picture. Everyone's financial and business situation is a little different. You can always do the paperwork and recording yourself on the LLCs, or insist that a legal assistant do the work at the law firm (preferably a small one) in order to get a lesser bill for fees.