To form an LLC or to not form an LLC?

3 Replies

Hello everyone! I'm about to refinance and just got the go-ahead from the lawyer about putting the property into an LLC. However, I had a few questions and concerns. Any help would be greatly appreciated! Also, the property and LLC will be in Florida.

1. If I chose to be taxed as an individual instead of a corporation (have my profit/loss flow through my personal tax return) will I still have the same protection as I would if I were taxed as a corporation?

2. Even if the mortgage is in my name, am I still protected because the ownership of the property in in the LLC? I guess my concern is that if I have multiple mortgages under my name for multiple properties but they're all in LLC's, all of my properties can be gone after because all of the mortgages are in my name. (I know this is probably a silly fear)

3. Will my homeowners insurance SIGNIFICANTLY increase?

4. Will my property insurance SIGNIFICANTLY increase?

5. Are there any other fees/significant increases of expenses I'm not aware of besides the yearly upkeep/filing fee for the LLC? I know the yearly fee is something like $150 which isn't bad at all.

I just want to make sure an LLC is the right step right now. After my mortgage payment and with property insurance and taxes the way they are now, I'll be making about a $300 profit a month on the house. If I have a lot more expense increases, I worry the protection of the LLC isn't worth it RIGHT NOW as I just graduated college and have no other assets to protect. If it won't have too much of a negative effect on the monthly cash flow, I'd like to go ahead and do it, especially because it would be good for the future. But if it will, I'd rather wait.

Thanks in advance for any advice/shared experience!

-Mandy

Since every state has different Laws in regards to LLC.
I highly recommend talking to a real estate lawyer and CPA. Who both specialize in real estate.

The insurance question also is one for your insurance agent.

Thanks for the information guys!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here