LLC or not before purchase?

2 Replies

Depends on the property. If this is your first property and it's a SFH or small multi, there's not a whole lot of benefit. Better to just get really good liability insurance.

On the other hand, if you are buying something at commercial scale, then yes, it's a good idea. Keeping investments fenced off into their own LLCs at scale is a hedge against the whole thing from collapsing if one deal goes bad or you have one lawsuit. So when you are dealing with multiple large scale investments, it is a nice layer of protection. But it's not some magic trick that relieves you of all liability, and there is both a setup cost and an annual cost to having one.

Thank you! It would indeed be for a SFH or small residential multifamily property. I have discovered the LLC startup and maintenance fees can be a bit high, and would certainly cut into cashflow. Thanks for your feedback!

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