LLC or Corporation for buy and hold and rentals?

[Heather Ippolito]

I'm just starting out and a bit confused about which would be best for me. My husband and I plan to buy a few properties over the next few years to rent out and make slow steady income with. Which business formation would be best for this? This will be in NY if that matters. 

Thank you, Heather

[Aristotle Kumpis]

This is a legal question that you should ask an attorney. I have a few income properties and don't have LLC's. Why? I really don't see the need for them. Every time you form a corp, you have to pay the annual fees. Not to mention keeping track of paperwork. And it should always be formed in the state where the property is located in.

For some reason, people think they need to form an LLC before they buy a property. If you are buying a commercial property, then yes. But if you are buying single family homes, I really don't see the need. If you have a high net worth, it may be a good idea. But again, I would consult with a real estate attorney. Having a good insurance policy will protect you against most things. Also keep in mind that if you are going to finance your property, it cannot be in an LLC. Conventional lenders will not loan in your LLC.