Forced into first deal!

6 Replies

I have been lurking around BP, listening to podcasts, and reading up on real estate investments for some time now. As fate would have it, we have been unable to sell our previous house for a year now, so we have decided to go ahead and rent it out. It is somewhat of a hack as there is also a building on the property that my wife will continue to work out of. My question is about setting up an llc—is now the time to set that up and do I need to deed the property to said llc? Thanks! I’m excited to see where the future takes us. Sometimes we have to be forced into what we want! B

Brett, you still own the house and are just renting it? You do not need to set up an LLC for that. Just make sure you have proper insurance and I'd have your tenants get liability insurance as well and make it a requirement in the lease.

Congrats! That's exciting. I'm not a legal/financial/accounting expert, so please consult your professionals, if you'd like official advice. However, I'd recommend doing a separate LLC per property. Yes, I'd also recommend deeding the property to the LLC.

I'm secretly hoping to run into the same issue, by the way!  Haha.  My current home could be a great rental.

I disagree with @Thomas S. about LLC's complicating your taxes. I think it actually simplifies your taxes, and creates a clear wall/bucket for your rental income/taxes. As others have said, an LLC won't necessarily protect you 100%, but it can provide some legal protection and provide a simple layer of anonymity.

As far as suit protection, call your current insurance provider(s) and ask about an umbrella policy for converting your primary residence to a rental.