How to Buy Property With an LLC
Form the LLC first, get its EIN, then sign the purchase contract and take title in the LLC's name, with the money coming from the LLC's account. Two things decide whether it works: who signs, and who is lending. A standard Fannie Mae loan can't go to an LLC, so you need cash or a lender that lends to entities. This page covers the purchase itself. For formation choices see the real estate LLC guide, and for the downsides see disadvantages of an LLC for a rental. The title, signing and funding steps are the same whether you hold the house as a rental or flip it. Statute citations below are Texas; other states' fees and signing rules differ. This is general information, not legal or tax advice.
The purchase, in order
- Form the LLC with the state. The IRS says to form a corporation or LLC through the secretary of state before you apply for an EIN. In Texas the certificate of formation costs $300, the same fee as a for-profit corporation (Business Organizations Code secs. 4.152 and 4.154).
- Get the EIN from the IRS. It costs nothing. The IRS warns against websites that charge for one.
- Sign the contract and take title in the LLC's name. The liability protection attaches to what the LLC owns. In Texas, a member or manager isn't liable for the LLC's debts unless the company agreement says otherwise (sec. 101.114), so a house titled in your own name sits outside that protection.
- Have the right person sign. A governing person, or an officer the LLC has authorized, is the LLC's agent. Their signature on a mortgage or conveyance in the company's name, in the ordinary course of business, binds the LLC (sec. 101.254). So the deed, loan papers and closing documents are signed by a person "as manager" or "as member" of the LLC. Ask the title company what it wants to see from an LLC buyer.
- Fund it from the LLC's account. Wire the down payment or the cash price from the LLC's own account, not yours.
- Pick a loan that can lend to an LLC. Fannie Mae buys loans made to natural persons. The exceptions are revocable living trusts, HomeStyle Renovation mortgages and certain land trusts. An LLC isn't on the list. Entity loans have their own rates and minimums, and they vary by lender, so get quotes. For one common type, see DSCR loans explained.
Worked example: does the rent cover an LLC loan?
Illustrative numbers; the 7.5% rate is an assumption, not a quote.
| Assumption | Value |
|---|---|
| Property | Single-family rental bought in a new single-member Texas LLC |
| Purchase price | $200,000 |
| Down payment | 25% = $50,000 |
| Loan | $150,000, 30-year fixed at 7.5% from a lender that lends to LLCs |
| Property tax | $300 a month |
| Insurance | $150 a month |
| Market rent | $1,900 a month |
| Entity setup cash | $300 Texas formation fee, $0 EIN. Registered agent, legal and title fees not counted. |
| Step | Math | Result |
|---|---|---|
| Monthly rate and payments | 0.075 / 12; 30 years x 12 | 0.00625; 360 payments |
| Principal and interest | 150,000 x 0.00625 x (1.00625^360) / (1.00625^360 - 1) | $1,048.82 |
| Monthly payment with taxes and insurance | $1,048.82 + $300 + $150 | $1,498.82 |
| Rent coverage | $1,900 / $1,498.82 | 1.27 |
| Cash before the contract | $300 formation + $0 EIN | $300, plus the $50,000 down payment wired from the LLC's account |
The rent covers the payment 1.27 times, with $401.18 a month left before vacancy, repairs and management. Each lender sets its own minimum for an entity loan, so treat 1.27 as this example's number, not a pass or fail. If the rent were $1,500, coverage would be about 1.00. See debt service coverage ratio for the formula.
If you already own the property
Deeding a house you own into an LLC is a transfer, and a mortgage on it may have a due-on-sale clause. For 1-4 unit residential loans, federal law (12 U.S.C. 1701j-3(d)) lists the transfers a lender can't call due. That list includes a transfer into a living trust where you remain a beneficiary. It has no LLC transfer.
Fannie Mae's servicing rules do allow a transfer to an LLC without triggering due-on-transfer, but only if Fannie Mae bought or securitized the loan on or after June 1, 2016, and the original borrower controls the LLC or owns a majority of it. The servicer must tell the borrower that the property has to go back to a natural person before a refinance. Read due-on-sale clause, and call your lender before you record a deed. Ask the title company what happens to your existing owner's policy; see title insurance.
Tax and reporting
- Income tax: buying in an LLC doesn't change it by itself. A single-member LLC is disregarded, so its rent goes on the owner's return, unless it files Form 8832 and elects corporate treatment. A domestic LLC with two or more members is classified as a partnership by default.
- FinCEN beneficial ownership (BOI): under FinCEN's interim final rule, all entities created in the United States and their beneficial owners are exempt. Only certain foreign entities registered to do business in a state still report.
- FinCEN real estate reports: the Residential Real Estate Rule covered certain non-financed transfers to entities, and FinCEN's FAQ lists a limited liability company as an example of a "transferee entity." On March 19, 2026, the U.S. District Court for the Eastern District of Texas vacated the rule. FinCEN and the Justice Department have appealed. While the order stands, reporting persons aren't required to file, so a cash LLC purchase currently triggers no real estate report. Check the status at closing.
Doing this in Deal Run
Deal Run is our product. Before the LLC signs anything, you can run the address through MLS-grade comps, ARV, a photo-based repair estimate and Max Offer for a flip, rental or wholesale, and see whether the numbers carry the entity's costs and an entity loan's payment. If a sale is the better exit, Deal Run finds local landlords and flippers from purchase records. Skip tracing turns the owner of record, LLC or not, into a phone number and email to try. Then you email and text blast your buyer list: emails from your own Gmail, texts from your own number. Tracked links show who viewed your deal page. Run your list through the Do Not Call registry first.
Related: do you need an LLC to wholesale, skip tracing LLC owners and outreach. Terms: LLC, series LLC, operating agreement, land trust.
FAQ
Can I use a regular Fannie Mae loan to buy in an LLC?
No. Fannie Mae buys loans made to natural persons, with exceptions only for revocable living trusts, HomeStyle Renovation mortgages and certain land trusts. A purchase in an LLC's name needs cash or a lender that writes loans to entities.
Does buying in an LLC change my federal income tax?
Not by itself. A single-member LLC is disregarded, so its rent goes on the owner's return, unless it elects corporate treatment on Form 8832. A domestic LLC with two or more members is taxed as a partnership by default.
Do I have to file a beneficial ownership report for my LLC?
Not for a U.S.-formed LLC. Under FinCEN's interim final rule, all entities created in the United States and their beneficial owners are exempt from BOI reporting. Only certain foreign entities registered to do business in a state still report.
Can I deed a house I already own, with a mortgage, into an LLC?
Federal law does not protect that transfer from the due-on-sale clause. The protected list for 1-4 unit residential loans includes a transfer into a living trust where you stay a beneficiary, but no LLC transfer. Fannie Mae's servicing rules allow it only for loans Fannie Mae bought or securitized on or after June 1, 2016, where the original borrower controls or owns a majority of the LLC. Talk to your lender first.
Does a cash purchase in an LLC trigger a FinCEN real estate report?
Not while the court order stands. On March 19, 2026, a federal court in the Eastern District of Texas vacated FinCEN's Residential Real Estate Rule, and the government has appealed. Check the status at closing.
Sources
- IRS, Get an employer identification number, checked October 30, 2026
- Texas Business Organizations Code, Chapter 4 (secs. 4.152, 4.154), checked October 30, 2026
- Texas Business Organizations Code secs. 101.114 and 101.254, checked October 30, 2026
- IRS, Limited liability company (LLC), checked October 30, 2026
- Fannie Mae Selling Guide B2-2-01, General borrower eligibility requirements, checked October 30, 2026
- 12 U.S. Code sec. 1701j-3(d) (Garn-St Germain), checked October 30, 2026
- Fannie Mae Servicing Guide D1-4.1-02, Allowable exemptions for due-on-transfer, checked October 30, 2026
- FinCEN, Beneficial Ownership Information Reporting, checked October 30, 2026
- FinCEN, Residential Real Estate Rule FAQs (D.1), checked October 30, 2026
- FinCEN, Residential Real Estate Rule, checked October 30, 2026