Setting up an LLC

28 Replies

Hi All,

My name is Alpha,I live right outside of Philadelphia PA (Suburb) area and just getting started in the real estate industry. When is the best time to set up an LLC or if there is any other entities better and easy to set up for this business.

Thank you

Why do you feel you need one? Dont believe the myth that you are 100% protected with one. The best protection would be to make sure you have enough insurance which you dont need an LLC for.

If you end up going the LLC route I have heard (but have not verified) that Nevada-based LLC's offer the best asset protection from lawyers who would try to pierce the corporate veil to go after your personal assets....check with a competent real estate attorney if you go that route

Have you looked into buying your property in a trust?

trusts are easy:

you need a trustee

possibly a director

name of trust

a good trust document

and you and/or your LLC as a benifciary

Hey Alpha,

If you are doing a deal by yourself I do not think it is needed until you have a large amount of properties. I only set up an LLC when I started buying deals with other people.

Great luck.

Hey there @Alpha Diawara , Congrats on forward thinking. The other posters are correct to a degree. If you go the trust direction, and I think it is popular, you STILL need a LLC. And insurance is NOT the same thing as an LLC. Nor does it provide the same protection. If all you had was insurance and no LLC, your personal assets would still be at risk (ins doesn't cover all risk - and covers property but not mistakes in judgment - just saying I've seen it and its pretty sad) in a lawsuit and you might not be do some very basic things while you and insurance company sort things out. The LLC is a business entity and gives you some credibility. I also, would not want my personal assets and business assets co-mingled in that way. I could go on and on. But LLC is a nice easy way to protect your personal assets and I would recc. getting an LLC now ( its inexpensive) and prop ins when needed. Good Luck!

2 people have now said LLCs don't protect personal assets, go get insurance. But I don't think insurance protects personal assets either. And I think a lot of people misunderstand the purpose and function of an LLC.
From inc. magazine, "Limited liability means you can't be financially responsible for more than your investment in the company," writes Greg McFarlane in his book, Control Your Cash: Making Money Make Sense. "If you put in $10,000, and incur $11,000 in debt, you're only potentially liable for $10,000. Your creditors (check that, your LLC's creditors) can't 'pierce the corporate veil,' as the phrase goes."
LLCs can to a certain extent also protect personal assets. This is really only the case if you keep your LLC management and your personal spending completely separate. I think this is where people come to believe LLCs don't protect them. They've paid for the "security system" but through misuse they don't turn in on and leave their front door open. Then they are surprised they got robbed when they get back from vacation! You've got to use it properly.

It looks like this is a bit complex topic.

I will probably need to consult a real estate lawyer.

Thank you all for your input.


Hi Alpha,

It's probably late to chime in, but let me see if I can add something of value here.  I also invest in PA.  I think it's a great state to invest in! Entity formation in PA is cheap!!  

Attorney Referral: Brad Dornish  412-765-2726.  He is a very active real estate attorney, ask one of his courses on entities and ask if it's still up to date with law changes in the past couple years.  If you work with him, ask for the operating agreement(s).  I'm sure you won't have to ask, but just incase someone forgets.

What I did is made a few LPs to hold the properties and an LLC to be the general partner. I say to use only one LP. This is to save on taxes through strategic entity formation and maximize limited liability protections.

Entities in PA are so cheap (and don't have annual fees that it's totally worth it to get them.  Trusts in PA are weak and I kinda don't recommend them in most cases.  I have friends that use them well. 

 Also, it's very easy for you to form your own entity and save on the attorney fees.  I think brads training (for $99) will teach you all you really need to know.  But call an attorney (preferably Brad) and get a consultation.  

Talk Soon,

Phil Cutting

PS: The point about insurance is important, make sure you have enough insurance to only take a small loss if there is damage, more than that is more expensive than it's worth in most cases.

Hi Phil,

It is good to know other investors in your state i will definitely look in it further more and possibly give him a call.

Thanks for the input and let's connect sometime.


Hi Alpha,

I hope you have time to call him.  If you are a new investor you will not regret a free phone call :).

I would love to connect, but it'll probably have to be next year.  I wish you a great deal of success between now and then! 

Talk soon,


Originally posted by @Joe Gore:

@Brandon Luke,

Greg McFarlane is just another Guru selling snake oil. You can pierce the corporate veil with a court order. When someone sue an LLC. They will also sue the owner of the LLC.

Joe Gore

Yes. They can pierce it. It doesn't mean that it's a 100% guarantee that they will.

Having a LLC and good insurance doesn't guarantee protection of assets. It provides layers of protection and more hurdles for one to jump to do so. You want to make it as difficult as possible.

Also, I could be wrong, but aren't there some tax/business benefits to having a LLC rather than doing all this in your own name?

Hey guys,

I went on and set up an LLC and also able to set up a bank account with it as well.

I'm collecting my rent through that account every month

Great experience so far

Thank you all,

Hello All,

@Phillip Cutting, I ve been looking into investing in PA as well, I 've been told that Allentown, and other areas north of Philly would have great investment opportunities.  What are your thoughts and where do you invest in PA?