Should I start an LLC for my first rental?

Question

I’m new to real estate and I hear a lot about starting your LLC. Should I start one for my first rental? And if so, where do I start?

Costin I. · Answer

@Thomas Lee Nuckles @Elvin Tolentino Here is a graphical representation to your dilemma to help you in the quest for answers:

Jason D. · Answer

@Thomas Lee Nuckles you'll get answers from both sides. I did, because it gave me more lending options, but that may not be the case for everyone. It depends on a lot of factors as to whether it is worth doing.

If you were to start an LLC, you start by contacting a lawyer to set up the paperwork so that it does as intended, protect your personal assets from liability

TIm Harstead · Answer

If you decide not to LLC just make sure you have a good umbrella policy, as if something happens at your home or at your rental you are risking losing both.

Luke Carl · Answer

@Thomas Lee Nuckles. If you’re financing the property the answer is no for a couple of reasons.

1. The only equity you’ll have is the down payment. Your homeowners policy will protect you for much more than that.

2. You won’t be able to get financing in the LLCs name if it doesn’t show profit and have tax returns.

Also keep in mind that financing it in your name and quit claiming it to the LLC later is not a good idea.

Don’t bother with LLC just start buying. And don’t put you and your wife’s name on ANY loan. Your name or her name only!  Buy a nice property in a nice area that will rent for 1% next thing you know you’ll be making out your 10 conventionals each.

****This is a question for an attorney, which I am not.

This was typed on an iPhone

Terrell Garren · Answer

My rule of thumb -

If net personal wealth + rental property equity < $1M, then just use $2M umbrella policy

If net personal wealth + rental property equity > $1M, then use LLC and umbrella policy

Best, Terrell

Elvin Tolentino · Answer

@Thomas Lee Nuckles

Subbed. I am also curious as to what answers are provided.

Should I start an LLC for my first rental?

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