Is an LLC more trouble than its worth?

2 Replies

  I am just starting out in real estate and about to buy my first rental property.

Should I open an LLC for my first property? I'm in Pennsylvania and the fee is only $250. I understand that there are liability and tax benefits offered by an LLC, is the trouble of opening and managing an LLC worth it for someone just starting out?

Originally posted by @Joel Burt :

  I am just starting out in real estate and about to buy my first rental property.

Should I open an LLC for my first property? I'm in Pennsylvania and the fee is only $250. I understand that there are liability and tax benefits offered by an LLC, is the trouble of opening and managing an LLC worth it for someone just starting out?

Assuming you're the sole owner of the LLC, the tax liability just passes through to you so it has no effect on what you pay. The biggest pro in my opinion is that it can shield your personal assets from most lawsuits and the biggest con in my opinion is that you represent yourself in an eviction; an attorney will have to, at least in Ohio.

Updated about 3 years ago

Typo: If real estate is owned by LLC, you cannot represent yourself.

I have owned a number of rental properties without forming a single LLC. Make sure you have a good insurance with provisions for liabilities for tenant issues. You can also purchase a personal liability protection insurance, you should have it anyway. For tax purposes, unless you choose to be treated as a corporation, there are no tax advantages, you'll be filling your schedule E.

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