BiggerPockets

Yes, you should incorporate. Most likely with at least 2 companies. I know many investors who never incorportated and never had probelms, but you do not want to be one of the guys who gets sued, and loses everything.

I agree completely that you need to take care of problems as they arise. But are you suggesting not to form a company, or companies?

Keep this in mind too...

When you get your LLC and go to do your first deal with
it, it has no credit history.

And when you go to transfer title of your existing properties,
the mortgage convenant may allow them to disallow or to
up the rate to the current rate.

when you purchase a property, you should be able to purchase in your name, then do a Quit Claim Deed to transfer title to your Company. This will give you the protection you are looking for as far as liability goes, but certainly if anything happens as far as the mortgage goes, it is all on you.

This is exactly what I have been looking for in the forum. I formed an LLC and just bought my first investment property. I see from farther up this string I can quit claim it to the LLC name, but will I have a harder time taking out a home equity line to buy other properties? I can't seem to find out this kind of info from other places so I am glad I found this site. :D

What about if you have built up some credit in the LLCs name? Will they still charge a higher rate being in the business name versus personal? :shock:

I can see that I guess, just always looking for the better route. Something for nothing and the mortgage interest free..... :violin:

With all properties titled to you personally you can expose all of your properties with a single action in excess of the umbrella policy. With each property titled to a separate LLC you would expose only a single property with a single action. Even with an LLC you want insurance; the only question is "how much?"

You are correct. The administrative time / costs will increase as you increase the number of LLCs that you administrate. There is a cost-benefit tradeoff going on here. The bottom line question: how much money are you willing to lose in one lawsuit? That's how much equity you should have in each LLC.

Some people feel that having 4 properties per LLC is a good balance, but to each his own. Some states have easier reporting restrictions (i.e. it costs less money to operate an LLC formed in these states). Hint: avoid the blue states. :lol:

your best bet if you want to protect yourself is to have an LLC for each property. BUt for most people it is not practical especially if they are residential houses (not buildings).

I know of people who have 10+ houses and no LLC, but rather 10 million dollar umbrella policy. They do this because either way the person who is coming after them is attempting to get something. The policy will cover them 10 mill worth and they wont have to forfeit propertys. ..

Not sure if i explained myself fullly...but if you have more questions ask away.