Start an LLC prior to first investment?

Question

Joshua Houchins · Answer

Jeff G. yes you should form an llc. As noted above if you are paying cash I would form two llc one that owns the house and one that is the lender and has a dot on the property.  So in very simple terms llc 1 is the owner llc 2 is the lien holder.  Once you acquire a larger number of properties this will make more sense from a liability stand point to you.  Your attorney will understand.  As long as you run the company exactly how your operating agreement states you will be fine and protect yourself.

Second if you are getting a loan some banks will allow you to buy in your llc name as long as you personally gurentee the note.

Ryan Jackson · Answer

What about tax advantages? As someone who works full time and has a SFR I do not get much of a break on the expenses, repairs, and improvements due to my income and status of not being a full time real estate professional. Any members or CPAs in the BP world know if the tax advantages work out better having an LLC? I have seen some posts that claim it works out the same in either situation, I just find that hard to believe with the pre-tax dollar advantages of corporations.

Arlan Potter · Answer

You can have a company name without an LLC. I have a boatload of rentals, and never thought about a professional name for myself. It is just me.

Curt Davis · Answer

If you are purchasing all cash then an LLC can be ok.  If your doing bank financing you will not be able to make the actual purchase in the name of the LLC but you could quit claim it into the LLC after the purchase.

Personally there is no need for one as if protection is what you are worried about then all you need is an umbrella insurance policy along with the insurance you get already, you should be covered.

Good luck