LLC before purchasing my first property?

Question

Joshua Schneiderman · Answer

While I agree that insurance gets you a lot of the asset protection benefit that an LLC provides, I still believe the LLC is well worth the fairly low cost and additional administrative complexity.  It's additional protection against being underinsured and is "backup" in the event you face a claim that is not covered by your insurance.  @Wade Sikkink is right on though with his comment about properly maintaining the LLC.  If you don't do that, you'll be stuck with the cost of the LLC and jeopardize all of the benefit.

Wade Sikkink · Answer

The purpose of an LLC is to shield the owners from liability related to the operation of the business.  Setting up an LLC is not the only way to do this.  Insurance is also a factor.  I personally have an LLC for our real estate business and good insurance.  I think multiple LLC's for multiple properties is probably overkill for most people.

Just remember that if you do set up an LLC you need to properly maintain it (ie, don't comingle funds, etc.) or else it won't protect you.

Good luck.

Stefon Bostick · Answer

Thanks Brie.  I've read some recently and like you said, there are some ups and downs with creating an LLC im just trying to see if one would fit me and my situation.  Thanks for the info, i'll look up some more discussions as suggested.

Brie Schmidt · Answer

@Stefon Bostick - On the top right is a search bar, you can put in keywords like LLC and pull up hundreds of posts and blogs about this topic.

I personally have some properties in a LLC and some that are not.  It was really the financing that made the decision for me.  Residential loans cannot be funded to a LLC and commercial loans cannot be funded to a person.