Is there any benefit to using an LLC to collect rent.

3 Replies

Hi All, My wife and I have are renting rooms in our home to get starting investing. My question is is there any benefit to having an LLC collect rent money. Bear in mind title is wife and I name and we have the proper insurance policy to protect us from suit. And I know unless property is in LLC name it does no good to us in event of suit. I’ve been told getting cash flow through the LLC will make it much easier to buy next property in LLC’s name. Thanks for any advice in advance!
Originally posted by @Michael Sheridan :
Hi All,

My wife and I have are renting rooms in our home to get starting investing. My question is is there any benefit to having an LLC collect rent money. Bear in mind title is wife and I name and we have the proper insurance policy to protect us from suit. And I know unless property is in LLC name it does no good to us in event of suit. I've been told getting cash flow through the LLC will make it much easier to buy next property in LLC's name. Thanks for any advice in advance!

I know some people here like to use LLC to collect rent, but you can just do a DBA if all you are trying to do is open up a business account and structure your finances.

If you really want the full benefit of LLC, it will be costly. Ideally you want each property in their own LLC and then on top of that, if you are self-managing the properties, you would need to create an LLC just for the management or the tenant can also come after you since you are the property manager. To me, its not worth it unless I get 10+ properties. Landlord insurance in each properties as well as an umbrella insurance can take care of majority of the issues. if it arises.

Also, I have noticed that lenders will require higher down payment and higher interest rate when you try to put it under a different name than your own. 

@Michael Sheridan - As for the structure of LLC I would say doing a 30 min consult with an attorney might be worth it to make sure. As for buying the next property in the name of LLC and it being easy, i am not sure where you got that but thats not true. If you are planning to use Fannie/Freddie loans for your next residsntial property (which are the best finacing vehicles upto 10 loans for single and 20 for married couple) no lender will allow you to close and take the title in the name of an LLC. Only commercial loans or private money and a few other types can be closed in the name of LLC but not for Fannie/Freddie reaidential conforming loans. People take the title in their own name, setup a single member LLC and then transfer the title into the LLC