When is it time to LLC and How to Approach It

[Chris Tedeschi]

Good morning everyone,

My wife and I have one multi-family that we have been renting out for about eight years now. It was originally our first home that we moved away from and rented both units. We're now at a place where we wanted to begin investing much more deeply in multi-family homes and growing our re portfolio. So, we were looking to get some advice on how and when to do an LLC.

Any thoughts on this or if you can point us to another post, that'd be amazing.

Thanks so much,
Sonia and Chris

[Aaron W.]

@Chris Tedeschi Congrats on making the jump back into real estate.

There's really no one right answer to when you should create an LLC. Some investors create it right away while others wait until their portfolio is larger or they take on a non-spouse partner. You can protect yourself from potential liabilities without an LLC by purchasing an umbrella policy. They are typically very affordable and can be less burdensome than managing an LLC. With an LLC, you need to make sure you stay on top of the registration and pay the fees.

Another way to protect yourself from potential liabilities is to ensure you have a bank account open solely for your real estate investments. This also goes for getting a credit/debit card to spend only for your real estate investments. Do not comingle your funds. It won't matter how you set up your LLC, your personal accounts could be at risk if you comingle.

Best of luck!