Should you put your real estate into an LLC

[Andy Collins]

I started this because it seems like every couple of days someone new starts this topic, I hope we can all give our opinion on this, and refer newby's to this discussion.

I think there are a few reasons you should consider use an LLC for single family houses for a buy and hold investor (I am not a flipper so have no expertise in that area)

1. Your a high net worth individual

2. You already have your 10 conforming mortgages

3. If you are strictly an investor and have have someone else doing everything for you,,you are not personally involved with the property.

People often think they can put a property into an LLC and they are totally shielded from liability. If you rehabbed the property or oversaw the rehab, if you manage the property, or if you financed the property or personally guaranteed the property, the LLC will not protect you.

A good umbrella liability policy is your best protection. You will be surprised how little a $5 Million policy will cost,,and that is what can protect you (and the insurance company will also defend you in a lawsuit because of that).

I read people wanting to form LLCs, series LLC's, etc etc,,,for the average investor, it is just a big waste of your time and money.

Remember a conforming mortgage (30 year fixed rate) are only for individuals, not for LLC's or other entities,,,then people say they will finance in their personal name and move into an LLC,,of course that could trigger a due on sale clause, but also that is a waste,,if your financing the property in your personal name, your tied to it.

How you stay out of liability issues is doing things right, don't have a handy man doing electrical work, and make sure you take care of any issues that could cause harm to anyone. Also get along with your tenants, people rarely sue people they like, and if a tenant complains about something that could be a hazard, immediately fix it!

I know there are others that have a different opinion, and i invite them to join in,,,I just would like to have one thread going for people with these questions to be able to read.

andy